Business glossary

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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.

Absolute Advantage - An absolute advantage exists when a nation or economic region is able to produce a good or service more efficiently (using the same amount of resources) than a second nation or region. Business glossary.

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.  Business glossary.

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 - The recording, classifying, summarizing and interpreting in a significant manner and in terms of money, transactions and events of a financial character. Business glossary.

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. Business glossary.

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.  Business glossary.

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 Accounting - A method of reporting income when earned and expenses when incurred, as opposed to reporting income when received and expenses when paid.

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. Business glossary.

Accrual method - Reporting income when it is earned, though one may receive payment in a later year. Expenses are deducted in the tax year they are incurred, whether or not they are paid in the same year.

Accrued Interest - The interest that has accumulated since the last interest payment up to, but not including, the settlement date and that is added to the contract price of a bond transaction.

Acquisition - The acquiring of supplies or services by the federal government with appropriated funds through purchase or lease.

Actual Expenses - Refers to car and truck expenses. Method used to deduct costs of operating and maintaining a car or truck in your business, for example, depreciation, gas, repairs, etc. Expenses must be divided between business and personal use if used in both. Business glossary.

Actuary - A professional expert in pension and life insurance matters, particularly trained in mathematical, statistical, and accounting methods and procedures, and in insurance probabilities.

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.

Affiliates - Business concerns, organizations, or individuals that control each other or that are controlled by a third party. Control may include shared management or ownership; common use of facilities, equipment, and employees; or family interest.

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. Business glossary.

Analysis - Breaking an idea or problem down into its parts; a thorough examination of the parts of anything.

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.

Annuity - A level stream of equal dollar payments that lasts for a fixed time. An example of an annuity is the coupon part of a bond with level annual payments.

Anti-dumping Laws - Laws that are enacted to prevent dumping - offering prices in the overseas market that is lower than that at which a product is sold in its home domestic market.

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.

Arbitrage - The process of purchasing and selling the identical products, such as foreign exchange, stocks, bonds and other commodities, in several markets intending to make profit from the difference in price. Arbitrage is generally seen as a "risk-less" transaction. Business glossary.

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.

Assumptions - The act of assuming/undertaking another's debts or obligations.

Attachment - Legal seizure of a property or a person before the judgment is made, in order to secure compensation if awarded. The prosecutor can request the court to issue an order to seize a property.

Audit - An examination of accounting documents and of supporting evidence for the purpose of reaching an informed opinion concerning their propriety.

Autarky - In models of international trade, a situation in which there is no cross-border trade.

Avalisation - Payment undertaking given by a bank in respect of a bill of exchange drawn.

Average Accounting Return (AAR) - The average project earnings after taxes and depreciation divided by the average book value of the investment during its life.