Glossary of Business terms
(Common business terms)
A
Above-the-line:In Marketing, relating to marketing expenditure on advertising in media such as press, radio, television, cinema, and the World Wide Web, on which a commission is usually paid to an agency.
Absorbed Account:An account that has lost its separate identity by being combined with related accounts in the preparation of a financial statement.
Absorbed Business:A company that has been merged into another company.
Absorbed costs:The indirect costs associated with manufacturing, for example, insurance or property taxes.
Absorption costing: An accounting practice in which fixed and variable costs of production are absorbed by different cost centers.
Abusive tax shelter: A tax shelter that somebody claims illegally to avoid or minimize tax.
Accelerated cost recovery system:A system used in computing the depreciation of some assets acquired before 1986 in a way that reduces taxes.
Accelerated depreciation:A system used for computing the depreciation of some assets in a way that assumes that they depreciate faster in the early years of their acquisition.
Access bond:A type of mortgage that permits borrowers to take out loans against extra capital paid into the account, home-loan interest rates being lower than interest rates on other forms of credit.
Account:A record of a business transaction. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged.
Accounting cost: the cost of maintaining and checking the business records of a person or organization and the preparation of forms and reports for financial purposes.
Accounting insolvency:A the condition that a company is in when its liabilities to its creditors exceeds its assets.
Account balance:The difference between the debit and the credit sides of an account.
Accountant: One who is skilled at keeping business records. Usually, a highly trained professional rather than one who keeps books. An accountant can set up the books needed for a business to operate and help the owner understand them.
Accounting period: A time interval at the end of which an analysis is made of the information contained in the bookkeeping records. Also the period of time covered by the profit and loss statement.
Accounts payable: Money which you owe to an individual or business for goods or services that have been received but not yet paid for.
Accounting rate of return: the ratio of profit before interest and taxation to the percentage of capital employed at the end of a period. Variations include using profit after interest and taxation, equity capital employed, and average capital for the period.
Accounts receivable: Money owed to your business for goods or services that have been delivered but not yet paid for.
Accounts receivable factoring: the buying of accounts receivable at a discount with the aim of making a profit from collecting them.
Accrual basis: A method of keeping accounts that shows expenses incurred and income earned for a given fiscal period, even though such expenses and income have not been actually paid or received in cash.
Actuary: A professional expert in pension and life insurance matters, particularly trained in mathematical, statistical, and accounting methods and procedures, and in insurance probabilities.
Added value: The difference between the selling price of a product or service and the cost of inputs such as materials and components.
Administrative expense: Expenses chargeable to the managerial, general administrative and policy phases of a business in contrast to sales, manufacturing, or cost of goods expense.
Advertising: The practice of bringing to the public's notice the good qualities of something in order to induce the public to buy or invest in it.
Agent: A person who is authorized to act for or represent another person in dealing with a third party.
Amortization: To liquidate on an installment basis; the process of gradually paying off a liability over a period of time.
Analysis:Breaking an idea or problem down into its parts; a thorough examination of the parts of anything.
Annual general meeting (AGM): A legal requirement for all companies; all shareholders may attend. They vote on who they want to be on the board of directors for the coming year and on other issues raised by the board or themselves.
Annual report: The yearly report made by a company at the close of the fiscal year, stating the company's receipts and disbursements, assets and liabilities.
Appraisal: Evaluation of a specific piece of personal or real property. The value placed on the property evaluated.
Appreciation: The increase in the value of an asset in excess of its depreciable cost due to economic and other conditions, as distinguished from increases in value due to improvements or additions made to it.
Appropriation account: The part of the profit and loss account which shows how the profit after tax is distributed – either as dividends or kept in the company as retained profit.
Arbitrator: A person who listens to both sides in an industrial dispute (trade union and management) and the gives a ruling on what the arbitrator thinks is fair to both sides.
Arrears: Amounts past due and unpaid.
Articles of Incorporation: A legal document filed with the state that sets forth the purposes and regulations for a corporation. Each state has different regulations.
Assets: Anything of worth that is owned. Accounts receivable are an asset.
Audiotaping: The act of recording onto an audiotape.
Audit:An examination of accounting documents and of supporting evidence for the purpose of reaching an informed opinion concerning their propriety.
Autocratic leader ship: Instructions and strategies are issued from above with little opportunity for contributors to decision-making from less senior employees.
Average cost per unit: The total cost of production divided by total output.