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378 Cards in this Set

  • Front
  • Back
When a country has a monopoly on producing a product (is the only source/producer of an item) or is able to produce it more efficiently than all other countries.
ABSOLUTE ADVANTAGE
The recording, classifying, measuring, summarizing, and interpreting of financial information, events, and transactions to provide management and other interested parties the information they need to make good decisions.
ACCOUNTING
Procedures used to verify accounting reports and statements.
ACCOUNTING AUDITS
A six-step (number of steps varies depending upon the source) procedure that results in the preparation and analysis of the two major financial statements: the balance sheet and the income statement; steps include: examining source documents, recording transaction in an accounting journal, posting recorded transactions, and preparing financial statements.
ACCOUNTING CYCLE
Assets equal liabilities plus owner’s equity.
ACCOUNTING EQUATION
A capital budgeting technique that evaluates a capital expenditure based on the average annual after-tax profits relative to the average book value of an investment.
ACCOUNTING RETURN ON INVESTMENT
Financing provided by a supplier of inventory to a given company.
ACCOUNTS PAYBLE (TRADE CREDIT)
The amount of credit extended to customers that is currently outstanding; money owed a company by its clients or customers.
ACCOUNTS RECEIVABLE
A method of accounting that matches revenues when they are earned against the expenses associated with those revenues.
ACCRUAL-BASIS ACCOUNTING
All unpaid (generally short-term) liabilities of a company that have been incurred but not paid.
ACCRUED EXPENSES
Total depreciation expense taken over the asset’s life.
ACCUMULATED DEPRECIATION
Total depreciation expense taken over the asset’s life.
ACQUISITION
A method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities.
ACTIVITY-BASED COSTING (ABC)
After-tax cash flow.
ADJUSTED INCOME
A categorization of accounts receivable based on the length of time they have been outstanding.
AGINGS SCHEDULE
A yearly statement of the financial condition and progress of an organization.
ANNUAL REPORT
A contract to make regular payments to a person for life or for a fixed period.
ANNUITY
A line of credit secured by working-capital assets.
ASSET-BASED LOAN
Determination of the value of a business by estimating the value of its assets.
ASSET-BASED VALUATION
Economic resources or items of value (e.g. cash, inventory, land, equipment, buildings, and other tangible and intangible things) owned by a firm.
ASSETS
The full-time employment of children for work otherwise done by adults.
CHILD LABOR
A trading alliance of ten Southeast Asian nations.
ASSOCIATION OF SOUTHEAST ASIAN NATIONS
The job of reviewing and evaluating the records used to prepare a company’s financial statements.
AUDITING
A system that permits payments such as deposits or withdrawals to be made to and from a bank account by magnetic computer tape.
AUTOMATED CLEARINGHOUSES (ACHS)
The most familiar form of electronic banking, which dispenses cash, accepts deposits, and allows balance inquiries and cash transfers from one account to another.
AUTOMATED TELLER MACHINE
An approach in which total cost for a given period is divided by quantity sold in that period in order to set a price.
AVERAGE PRICING
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
BALANCE OF PAYMENTS
A nation’s relationship of exports to imports.
BALANCE OF TRADE
The financial “snapshot” statement/report that shows a firm’s financial condition (itemization of assets, liabilities, and ownership equity) at a specific point in time.
BALANCE SHEET
The legal process by which a person, business, or government entity unable to meet financial obligations by having the court divide any assets among creditors, freeing the debtor to begin anew.
BANKRUPTCY
Conditions that prevent new companies from entering an industry.
BARRIERS TO ENTRY
The trading of goods and services for other goods and services directly.
BARTER
A corporate certificate (IOU) indicating that a person has lent money to a firm; debt instrument companies sell to raise long-term funds.
BOND
The recording of business transactions.
BOOKKEEPING
The last line in a profit and loss statement; it refers to net profit.
BOTTOM LINE
A name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.
BRAND
The process used to determine profitability at various levels of sales.
BREAK-EVEN ANALYSIS
Sales volume at which total sales revenue equals total costs.
BREAK-EVEN POINT
An internal financial document that expresses management’s future expectations/forecast in monetary terms for revenues/expenses for a period of time and, based on those expectations, allocates the use of specific resources throughout the firm.
BUDGET
The condition in which a nation spends more than it takes in from taxes.
BUDGET DEFICIT
The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences. Also called budgetary controlling.
BUDGETING
Any activity that seeks profit by providing goods and services to others.
BUDGET
A detailed and precise written document that describes the nature of the business, the rationale, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s) related to startup considerations; includes a step-by-step explanation of how it will achieve its goals.
BUSINESS PLAN
A budget/process that analyzes and highlights a firm’s needs and spending plans for major asset purchases that often require large sums of money but are intended to maximize its value; analysis is an analytical method that helps managers make decisions about long-term investments.
CAPITAL BUDGET
Major investments in long-term assets such as land, buildings, equipment, or research and development.
CAPITAL EXPENDITURES
The gains (positive) and losses (negative) difference between the purchase price of a stock and its sale price.
CAPITAL GAINS & LOSSES
An economic system in which all or most of the factors of production and distribution of goods and services are privately owned and operated for profit by individuals.
CAPITALISM/FREE ENTERPRISE
A group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets.
CARTEL
A method of accounting that reports transactions only when cash is received or a payment is made.
CASH-BASIS ACCOUNTING
A planning document that estimates a firm’s projected receipt and payment of dollars resulting in a cash balance at the end of a given period.
CASH BUDGET
The time required to convert paid-for inventories and accounts receivable into cash.
CASH CONVERSION PERIOD
The difference between cash coming in and cash going out of a business over a daily, weekly, monthly, or yearly basis.
CASH FLOW
Forecast that predicts the amount and timing of cash inflows and outflows in future periods.
CASH FLOW FORECAST
A financial report showing a firm’s sources and uses of cash.
CASH FLOW STATEMENT
Net cash flows generated from operating a business, calculated by adding back to operating income depreciation, deducting income taxes, and factoring in any changes in net working capital.
CASH FLOWS FROM OPERATIONS
An accountant who has a bachelor’s degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors.
CERTIFIED INTERNAL AUDITOR
A professional accountant who has met certain educational and experience requirements and been certified by the Institute of Certified Management Accountants; private accountants with some managerial responsibility.
CERTIFIED MANAGEMENT ACCOUNTANT (CMA)
An accountant who passes a series of examinations and educational and professional requirements established by the American Institute of Certified Public Accountants and state requirements.
CERTIFIED PUBLIC ACCOUNTANT
A profit-making organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans.
COMMERCIAL BANK
Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.
COMMAND ECONOMIES
Organizations that make short-term loans to borrowers who offer tangible assets as collateral.
COMMERCIAL FINANCE COMPANIES
An economic and political system first described by Karl Marx as a society in which the people without regard to class (a/k/a the state) makes all economic decisions and owns all the major forms of production and nation’s resources.
COMMUNISM
Theory of international trade which asserts that a country should sell to other countries those products that it produces most efficiently or at a lower cost.
COMPARATIVE ADVANTAGE THEORY
The rivalry among businesses for consumers’ dollars.
COMPETITION
A benefit that exists when a firm has a product or service that is seen by its target market as better than those of competitors; what sets an organization apart; its distinct edge allowing it to deal with market and environmental forces better than its competitors.
COMPETITIVE ADVANTAGE
Rating an organization’s practices, processes, and products against the world’s best.
COMPETITIVE BENCHMARKING
The immediate environment surrounding a firm; includes suppliers, customers, competitors, and the like.
COMPETITIVE ENVIRONMENT
Environmental scanning activity that seeks to identify who competitors are, what they are doing, and how their actions will affect the organization.
COMPETITOR INTELLIGENCE
A strategy employed for an organization that operates a single business and competes in a single industry.
CONCENTRATION
A strategy used to add new businesses that produce related products or are involved in related markets and activities.
CONCENTRIC DIVERSIFICATION
Financing granted by retailers to individuals who purchase for personal or family use.
CONSUMER CREDIT
All the individuals or households that want goods and services for personal consumption or use.
CONSUMER MARKET
Monthly statistics that measure changes in the prices of about 400 goods and services consumers buy.
CONSUMER PRICE INDEX (CPI)
A social movement of independent individuals, groups, and organizations that seeks to increase and strengthen the rights and powers of buyers in relation to sellers.
CONSUMERISM
The strategy of working with rivals on projects of mutual benefit.
CO-OPETITION
Keeping costs low in order to achieve profits and be able to offer prices that are attractive to consumers.
COST COMPETITIVENESS
A business-level strategy in which the organization is the lowest-cost producer in its industry.
COST LEADERSHIP STRATEGY
A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale by a business.
COST OF GOODS SOLD OR COST OF GOODS MANUFACTURED
A plan of action that requires a firm to be the lowest-cost producer with its market.
COST-BASED STRATEGY
Compares the costs and benefits of each potential course of action.
COST-BENEFIT ANALYSIS
An agreement between a buyer and a seller that provides for delayed payment for a product or service.
CREDIT
Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.
CREDIT UNIONS
Suggests there is no one right way to behave: ethical behavior is determined by its cultural context.
CULTURAL RELATIVISM
Behavioral patterns and values that characterize a group of consumers in a target market/organization (corporate culture); the social structures and intellectual traits that characterizes a society; the behaviors and beliefs characteristic of a particular social, ethnic, or age group.
CULTURE
Items that can be converted into cash within a company’s operating cycle (usually one year); short-term assets such as cash, investments, accounts receivable, and inventory.
CURRENT ASSETS (GROSS WORKING CAPITAL)
Borrowed money that must be repaid within 12 months.
CURRENT DEBT (SHORT-TERM LIABILITIES)
Short-term debts such as accounts payable, accrued salaries, accrued taxes, and short-term bank loans.
CURRENT LIABILITIES
An electronic funds transfer tool/card that serves the same function as checks: It withdraws funds from a checking account, resulting in a direct, immediate, electronic payment from the cardholder’s checking account to a merchant or third party.
DEBIT CARD
Business financing provided by creditors.
DEBT
Funds raised through various forms of borrowing that must be repaid.
DEBT CAPITAL
Involves borrowing money that must be repaid over time with interest.
DEBT FINANCING
A leverage ratio which indicates the company’s ability to meet its long term financial obligations.
DEBT-EQUITY RATIO
A measure of the fraction of a firm’s assets that are financed by debt and how much is financed by owners’ equity, determined by dividing total debt by total assets.
DEBT RATION/DEBT UTILIZATION RATIOS
A situation where prices are actually declining.
DEFLATION
The quantity of products that people/consumers are willing to buy at different prices at a specific time.
DEMAND
The technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand from the owner.
DEMAND DEPOSIT
Dividing the market by age, income, and educational level.
DEMOGRAPHIC SEGMENTATION
Specific characteristics that describe customers and their purchasing power.
DEMOGRAPHIC VARIABLES
The statistical study of human population to learn its size, density, and other characteristics.
DEMOGRAPHY
The amount of debt represented by one bond.
DENOMINATION
Assets whose value declines, or depreciates, over time.
DEPRECIABLE ASSETS
The systematic write-off of the cost of tangible assets such as buildings and equipment over its estimated useful lifetime in which they are expected to be used.
DEPRECIATION
Costs related to a fixed asset, such as a building or equipment, allocated over its useful life.
DEPRECIATION EXPENSE
A severe recession/condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced.
DEPRESSION
Government withdrawal of certain laws and regulations that seem to hinder competition.
DEREGULATION
Lowering the value of a nation’s currency relative to other currencies.
DEVALUATION
A plan of action/business strategy designed to provide a product or service with unique attributes that are valued widely by consumers.
DIFFERENTIATION-BASED STRATEGY
A detailed statement provided to a prospective franchisee, containing such information as the franchisor’s finances, experience, size, and involvement in litigation.
DISCLOSURE DOCUMENT
The interest rate that the Fed charges for loans to member banks.
DISCOUNT RATE
A capital budgeting technique that compares the present value of future cash flows with the cost of the initial investment.
DISCOUNTED CASH FLOW (DCF)
Temporary price reductions, often employed to boost sales.
DISCOUNTS
A condition where price increases are slowing (the inflation rate is declining).
DISINFLATION
Selling off parts of the organization to refocus attention on core business areas.
DIVESTURE
Part of a firm’s profits that may be distributed to stockholders as either cash payments or additional shares of stock.
DIVIDENDS
The concept of writing every transaction in two places resulting in a self-balancing accounting system that maintains the balance of the accounting equation.
DOUBLE-ENTRY BOOKKEEPING SYSTEM
The average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time.
DOW-JONES INDUSTRIAL AVERAGE
Selling products in a foreign country at lower prices than those charged in the producing country.
DUMPING
Charging more than the standard price when the customer’s profile suggests that the higher price will be accepted.
DYNAMIC PRICING STRATEGY
Earnings or profits after operating expenses and interest expenses but before taxes.
EARNINGS BEFORE TAXES
Its goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders.
ECOCENTRIC MANAGEMENT
A slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers.
ECONOMIC CONTRACTION
The situation that occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment.
ECONOMIC EXPANSION
The money available in the economy.
ECONOMIC PIE
To produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors.
ECONOMIC RESPONSIBILITIES
The probability that a government will mismanage its economy and thereby change the business environment in ways that hinder the performance of firms operating there.
ECONOMIC RISK
A financial tool for measuring corporate and divisional performance, calculated by taking after-tax operating profit minus the total annual cost of capital.
ECONOMIC VALUE ADDED (EVA)
The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
ECONOMICS
The situation in which companies can produce goods more inexpensively if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase (efficiencies that
ECONOMIES OF SCALE
Economies in which materials and processes employed in one product can be used to make other, related products.
ECONOMIES OF SCOPE
Demand that changes significantly when there is a change in the price of the product; elasticity is the degree to which a change in the price affects the quantity demanded.
ELASTIC DEMAND
An electronic funds transfer tool that converts a traditional paper check into an electronic transaction at the cash register and processes it through the Federal Reserve’s Automated Clearing House.
ELECTRONIC CHECK CONVERSION (ECC)
A way for organizations to exchange standard business transaction documents using direct computer-to-computer networks.
ELECTRONIC DATA INTERCHANGE (EDI)
A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks by means of an electronic terminal, telephone, computer, or magnetic tape.
ELECTRONIC FUNDS TRANSFER (EFT)
Money raised from within the firm or through the sale of ownership in the firm.
EQUITY CAPITAL
Involves exchanging ownership shares for outside investment monies.
EQUITY FINANCING
The value of the firm less the debt owed by the firm.
EQUITY VALUE (OWNER’S EQUITY)
Common European currency.
EURO
An organization of European nations established in 1958 whose purpose is to facilitate and promote free trade among member countries in Europe; one of the largest single markets today.
EUROPEAN UNION (EU)
Setting prices lower than competitors and then not having any special sales.
EVERYDAY LOW PRICING (EDLP)
The value of one country’s currency relative to the currencies of other countries.
EXCHANGE RATE
An approach to going global that involves selling products produced in a home country to customers in another country.
EXPORTING
An evaluation conducted by one organization, such as a CPA firm, on another.
EXTERNAL AUDIT
Capital that comes from the owners’ investment in a firm.
EXTERNAL EQUITY
The process of selling accounts receivable for cash.
FACTORING
Refers to the Federal Reserve Bank
THE FED
An independent agency of the U.S. government established in 1933 that insures bank deposits.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
An independent agency of the federal government established in 1913 to regulate the nation’s banking and financial industry.
FEDERAL RESERVE BOARD
The function in a business that acquires funds for the firm and manages funds within the firm.
FINANCE
Accounting information and analyses prepared for people outside the organization.
FINANCIAL ACCOUNTING
A process in which a firm periodically compares its actual revenues, costs, and expenses with its projected ones.
FINANCIAL CONTROL
The use of debt in financing a firm’s assets.
FINANCIAL LEVERAGE
The job of managing a firm’s resources so it can meet its goals and objectives.
FINANCIAL MANAGERS
A section of the business plan that provides an account of the new firm’s financial needs and sources of financing and a projection of its revenues, costs, and profits.
FINANCIAL PLAN
Restatement of selected income statement and balance sheet data in relative terms.
FINANCIAL RATIOS
The funds used to acquire the natural and human resources needed to provide products; also called capital.
FINANCIAL RESOURCES
A report of a firms financial performance and resources, including an income statement, a balance sheet, and a cash flow statement summarizing all the transactions that have occurred over a particular period.
FINANCIAL STATEMENTS (ACCOUNTING STATEMENT)
The amount of interest owed to lenders on borrowed money.
FINANCING COSTS
Government efforts to keep the economy stable by increasing or decreasing taxes or government spending.
FISCAL POLICY
A measure of the relationship of sales to fixed assets.
FIXED ASSET TURNOVER
Assets that are relatively permanent, such as land, buildings, and equipment, that are intended for use in the business.
FIXED ASSETS
Using a particular competitor as a model in setting prices.
FOLLOW-THE-LEADER PRICING STRATEGY
A company owned in a foreign country by another company (called the parent company).
FOREIGN SUBSIDIARY
The right to use a specific business’s brand/name and sell its products or services in a given territory.
FRANCHISE
An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.
FRANCHISE AGREEMENT/CONTRACT
A person/entrepreneur who buys a franchise and whose power is limited by a contractual relationship with a franchising organization.
FRANCHISEE
A company that develops a product concept and sells others the rights to make and sell the products, specifying the methods to be followed and the terms to be met by the other party.
FRANCHISOR
Economic systems in which decisions about what to produce and in what quantities are decided by the market, that is, by buyers and sellers negotiating prices for goods and services and without government intervention.
ECONOMICS/SYSTEM
The movement of goods and services among nations without political or economic obstruction.
FREE TRADE
Assets = liabilities + owners’ equity; this is the basis for the balance sheet.
FUNDAMENTAL ACCOUNTING EQUATION
The purchase and sale of goods for delivery sometime in the future.
FUTURES MARKETS
A trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved.
GENERAL AGREEMENT ON TARRIFFS AND TRADE (GATT)
A book or computer file with separate sections for each account.
GENERAL LEDGER
Resources, markets, and competition are worldwide in scope.
GLOBAL ECONOMY
The expansion of international business, encouraged, by converging market preferences, falling trade barriers, and the integration of national economies; a strategy that involves standardizing products (and, as much as possible, their proportion and distribution) for the whole world, as if it were a single entity.
GLOBALIZATION/GLOBAL STRATEGY
Tangible products such as computers, food, clothing, cars, and appliances.
GOODS
The total value of goods and services produced in a country in a given year.
GROSS DOMESTIC PRODUCT (GDP)
Original cost of depreciable assets before any depreciation expense has been taken.
GROSS FIXED ASSETS
Revenues minus the cost of goods sold to generate revenues.
GROSS INCOME/PROFIT
How much a firm earned by buying (or making) and selling merchandise.
GROSS MARGIN/GROSS PROFIT
To set prices that are higher than EDLP stores, and to have many special sales where the prices are lower than competitors.
HIGH-LOW PRICING STRATEGY
A business that maintains its primary facility in the residence of its owner.
HOME-BASED BUSINESS
Buying products from another country/foreign sources and selling them to buyers in the home country; an approach to going global that involves selling products at home that are made overseas.
IMPORTING
A limit on the number of products in certain categories that can be imported.
IMPORT QUOTA
A tax levied by a nation on goods imported into the country.
IMPORT TARIFF
An evaluation and unbiased opinion about the accuracy of a company’s financial statements.
INDEPENDENT AUDIT
The financial statement/report that shows a firm’s profit/loss after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm, and the resulting income over a given period of time.
INCOME STATEMENT (PROFIT AND LOSS STATEMENT)
Products used in the production of other products.
INDUSTRIAL GOODS
A general, continued rise in the prices of goods and services over time.
INFLATION
Demand that does not change significantly when there is a change in the price of the product.
INELASTIC DEMAND
A line of credit that requires a down payment, with the balance paid over a specified period of time.
INSTALLMENT ACCOUNT
Large organizations—such as pension funds, mutual funds, insurance companies, and banks—that invest their own funds or the funds of others.
INSTITUTIONAL INVESTORS
Items of value such as patents and copyrights that have no real physical form.
INTANGIBLE ASSETS
The collective brainpower or shared knowledge of a workforce.
INTELLECTUAL CAPITAL
Original intellectual creations, including inventions, literary creations, and works of art, that are protected by patents or copyrights.
INTELLECTUAL PROPERTY
A form of market coverage where by a product is made available in as many outlets as possible.
INTENSIVE DISTRIBUTION
The payment the issuer of the bond makes to the bondholders for use of the borrowed money.
INTEREST
A periodic assessment of a company’s own planning, organizing, leading, and controlling processes; also refers to accounting audits.
INTERNAL AUDIT
A system of checks and balances that safeguards assets and enhances the accuracy and reliability of financial statements.
INTERNAL CONTROL
Capital that comes from retaining profits with a firm.
INTERNAL EQUITY
The rate of return a firm expects to earn on a project.
INTERNAL RATE OF RETURN
The buying, selling, and trading of goods and services across national boundaries.
INTERNATIONAL BUSINESS
Selling a standard package of products, systems, and management services to a company in another country.
INTERNATIONAL FRANCHISING
Organization established in 1947 to promote trade among member nations by eliminating trade barriers, fostering financial cooperation, and assisting the smooth flow of money among nations.
INTERNATIONAL MONETARY FUND
A strategy that involves accessing foreign labor through contracts with independent providers.
INTERNATIONAL OUTSOURCING (OFFSHORING)
The process of using inventory such as raw materials as collateral for a loan.
INVENTORY FINANCING
The book (or computer worksheet) where accounting data are first entered; time-ordered list of account transactions.
JOURNAL
A paper based journal or electronic program that is used to record every transaction (information from accounting journals) that a company makes so that managers can find all the information one place; it helps a company to assess its financial condition.
LEDGER
A promise by the bank, honoring a draft or other demand for payment, to pay the seller a given amount if certain conditions are met.
LETTER OF CREDIT
Debts the business owes to others.
LIABILITIES
An act by which a producer (the licensor—company selling licensing rights) allows a foreign company (the licensee—or company buying the rights) to produce its product in exchange for a fee (a royalty).
LICENSING
Restricts an owner’s legal financial responsibilities to the amount invested in a business.
LIMITED LIABILITY
A given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available.
LINE OF CREDIT
Business operations cease and assets are sold to pay creditors.
LIQUIDATION
How fast an asset can be converted into cash to meet maturing debt obligations; ratios that measure the speed with which a company can turn its assets into cash to meet short-term debt.
LIQUIDITY
A commercial bank or post office box for receiving remittances from customers quickly.
LOCK BOX
Long-term loans and bond issues from banks or other sources with repayment terms of more than 12 months.
LONG-TERM DEBT/LIABILITIES
Borrowed capital that will be repaid over a specific time period longer than one year.
LONG-TERM FINANCING
Production facilities (plants), offices, and equipment—all of which are expected to last for many years.
LONG-TERM (FIXED) ASSETS
Forecast that predicts revenues, costs, and expenses for a period longer than 1 year, and sometimes as far as 5 or 10 years into the future.
LONG-TERM FORECAST
When business’s costs and expenses are more than its revenues.
LOSS
Money that can be raised quickly and easily (coins and paper money, checks, traveler’s check, etc.).
M-1
Money included in M-1 plus money that may take a little more time to raise (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.).
M-2
That part of economic study that looks at the operation of a nation’s economy as a whole.
MACROECONOMICS
Accounting used to provide information and analyses to managers within the organization to assist them in decision making in planning and directing the organizations activities.
MANAGERIAL ACCOUNTING
The brand names of manufacturers that distribute products nationally.
MANUFACTURERS’ BRAND NAMES
Group of people with unsatisfied wants and needs (customers and potential customers) who have both the resources (money) and the willingness (desire and authority) to purchase items, goods, services, and ideas (purchasing power).
MARKET
The process of locating and describing potential customers.
MARKET ANALYSIS
An economic system in which resources are primarily owned and controlled by the private sector.
MARKET ECONOMY
The uncertainty associated with an investment decision.
MARKET RISK
The price determined by supply and demand.
MARKET PRICE
A financial tool that measures the stock market’s estimate of the value of a firm’s past and expected investment projects.
MARKET VALUE ADDED (MVA)
The process of dividing the total market into several groups whose members have similar characteristics.
MARKET SEGMENTATION
(1) A group of activities designed to expedite transactions by creating, distributing, pricing, and promoting goods, services, and ideas. (2) The process of determining customers’ wants and needs and then providing customers with goods and services that meet or exceed their expectations.
MARKETING
The combination of ingredients that go into a marketing program: product, price, place, promotion, and distribution activities the firm can control to achieve specific goals within a dynamic marketing environment.
MARKETING MIX
Applying a percentage to a product’s cost to obtain its selling price.
MARKUP PRICING
A small firm that provides minimal profits to its owner.
MICROBUSINESS
That part of economic study that looks at the behavior of people and organizations in particular markets.
MICROECONOMICS
An entrepreneur willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle.
MICROENTREPRENEUR
Economic systems in which some allocation of resources is made by the market and some is made by the government; combination of two different economies.
MIXED ECONOMIES
The means by which the Fed manages the money supply and interest rates in an economy.
MONETARY POLICY
Anything that people generally accept as payment for goods and services.
MONEY
How much money there is to buy available goods and services.
MONEY SUPPLY
The market situation/structure in which there are a large number of sellers (fewer than in pure competition) that produce similar products, but the products are perceived by buyers as different.
MONOPOLISTIC COMPETITION
A market in which there is only one seller providing a product in a given market.
MONOPOLY
Gives a trading partner most favorable treatment for imports and exports.
MOST FAVORED NATION STATUS
Customizes products and advertising to best fit local needs.
MARKET ECONOMY
An organization that manufactures and maintains significant operations and markets products in many different countries and has multinational stock ownership and multinational management yet without ties to any one nation or region; typically bases in home country.
MULTINATIONAL CORPORATION (MNC)
A plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional and national differences.
MULTINATIONAL STRATEGY
Agreement linking Canada, the United States, and Mexico in an economic alliance.
NAFTA (NORTH AMERICAN FREE TRADE AGREEMENT)
The values and attitudes shared by individuals from a specific country that shape their behavior and beliefs about what is important.
NATIONAL CULTURE
The result of a series of government deficits (when the government spends more money than it collects in taxes) over time.
NATIONAL DEBT
Assets that are very easily turned into cash but that cannot be used directly as a medium of exchange like paper money or checks.
NEAR MONEY
Gross fixed assets less accumulated depreciation.
NET FIXED ASSETS
Forms of commercial paper (such as checks) that are transferrable among businesses and individuals and represent a promise to pay a specified amount.
NEGOTIABLE INSTRUMENTS
Total revenue (profit or loss) minus expenses available to owners that may be distributed to the owners or reinvested in the company; also called net earnings.
NET INCOME OR NET LOSS
Money invested in current assets other than cash less accounts payable and accruals.
NET WORKING CAPITAL
The process of finding small but profitable market segments and designing custom-made products for them.
NICHE MARKETING
Financial organizations that accept no deposits but offer many of the services provided by regular banks (pension funds, insurance companies, commercial finance companies, consumer finance companies, and brokerage houses).
NONBANKS
An organization whose goals do not include making a personal profit for its owners but rather providing a service but are not owned by a government entity.
NONPROFIT ORGANIZATION
An agreement that eliminates tariffs and trade restrictions on agricultural and manufactured products, to encourage free trade among the United States, Canada, and Mexico.
NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)
A form of competition in which the market is dominated by just a few sellers selling a product.
OLIGOPOLY
The buying and selling of U.S. government securities by the Fed with the goal of regulating the money supply.
OPEN-MARKET OPERATIONS
Costs related to marketing and selling a firm’s product or service, general and administrative expenses.
OPERATING COSTS
Earnings or profits after operating expenses but before interest and taxes are paid.
OPERATING INCOME
The budget that ties together all of a firm’s other budgets; it is the projection of dollar allocations at various costs and expenses needed to run the business, given projected revenues.
OPERATING MASTER BUDGET
The rate of return that could be earned on another investment of similar risk.
OPPORTUNITY COSTS OF FUNDS
Assigning various functions, such as accounting and legal work (purchasing products or services) to organizations that are outside the firm’s area of competitive advantage.
OUTSOURCING
Assets minus liabilities; owner’s investments in a company, plus profits retained in the firm.
OWNER’S/OWNERSHIP EQUITY
The market situation in which there are many sellers of nearly identical products and no seller is large enough to dictate the price of the product.
PERFECT COMPETITION
Strategy in which a product is priced lower than normal to attract many customers, hasten market acceptance, or to increase market share and discourage competition.
PENETRATION (PRICING) STRATEGY
Adding value to products by having them where people want them.
PLACE UTILITY
The fee charged by an insurance company for an insurance policy.
PREMIUM
Setting a high price to convey an image of high quality or uniqueness.
PRESTIGE PRICING
A specification of what a seller requires in exchange for transferring ownership or use of a product or service.
PRICING
The procedure by which one or more dominant firms set the pricing practices that all competitors in an industry follow.
PRICE LEADERSHIP
Setting a range of several distinct merchandise price levels (e.g., gas prices vary per quality).
PRICELINING STRATEGY
The market where firms raise financial capital.
PRIMARY MARKET
The interest rate that commercial banks charged on loans to their best, creditworthy customers (usually large corporations) for short-term loans.
PRIME RATE
The face value of a bond.
PRINCIPAL
Accountants employed by large corporations, government agencies, and other organizations to prepare and analyze their financial statements.
PRIVATE ACCOUNTANTS
Money provided by venture capitalists or private investors.
PRIVATE EQUITY
Reports that project a firm’s financial condition.
PRO FORMA STATEMENTS
An index that measures prices at the wholesale level.
PRODUCER PRICE INDEX
Any physical good, service, or idea that satisfies a want or need and offered to consumers in an exchange transaction.
PRODUCT
Making cost estimates and sales forecasts to get a feeling for profitability of new product ideas.
PRODUCT ANALYSIS
The creation of real or perceived product differences.
PRODUCT DIFFERENTIATION
The combination of product lines offered by a manufacturer.
PRODUCT MIX
The amount a business earns above and beyond what it spends for salaries and other expenses.
PROFIT
An itemized financial statement of the income and expenses of a company’s operations.
PROFIT AND LOSS STATEMENT
1. All the techniques sellers use to motivate people to buy products or services. 2. An attempt by marketers to inform people about products and to persuade them to participate in an exchange.
PROMOTION
Companies that continuously change the boundaries for their task environments by seeking new products and markets, diversifying and merging, or acquiring new enterprises.
PROSPECTORS
A condensed version of economic and financial information that a company must file with the SEC before issuing stock; the prospectus must be sent to potential stock purchasers.
PROSPECTUS
An accountant who provides accounting services to individuals or businesses on a fee basis.
PUBLIC ACCOUNTANT
Promotional strategy in which heavy advertising and sales promotion efforts are directed toward consumers to create consumer demand so that they will request the products from retailers, thus exerting pressure on marketing channel members to make it available.
PULL STRATEGY
The market structure that exists when there are many small businesses selling one standardized product.
PURE COMPETITION
The combination of product lines offered by a manufacturer.
PRODUCT MIX
Promotional strategy in which the producer uses advertising, personal selling, sales promotions, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise for their customers.
PUSH STRATEGY
Web software that delivers information tailored to a previously defined user profile; it pushes the information to users so that they don’t have to pull it out.
PUSH TECHNOLOGY
A national culture attribute that emphasizes relationships and concern for others.
QUALITY OF LIFE
The degree to which values such as assertiveness, the acquisition of money and materials goods, and competition prevail.
QUANTITY OF LIFE
Corporations owned and operated by the federal, state, or local government.
QUASI-PUBLIC CORPORATIONS
A stringent measure of liquidity that eliminates inventory.
QUICK RATIO (ACID TEST)
A restriction on the number of units of a particular product that can be imported into a county.
QUOTA
Calculations that measure an organization’s financial health.
RATIO ANALYSIS
Two or more consecutive quarter of decline in the GDP.
RECESSION
A percentage of commercial banks’ checking and savings accounts/deposits that must be physically kept in the bank for reserve.
RESERVE REQUIREMENT
Profits less withdrawals (dividends) and taxes over the life of the business, are reinvested in the assets of the firm, and belong to the owners in the form of equity.
RETAINED EARNINGS
The rate of return earned on a firm’s total assets invested, computed as operating income divided by total assets.
RETURN ON ASSETS
The rate of return earned on the owner’s equity investment, computed as net income divided by owner’s equity investment; for example, a business that earned $100 on a $1,000 investment would have a ROI of 10 percent; 100 divided by 1000.
RETURN ON EQUITY/RETURN ON INVESTMENT (ROI)
1. The total amount of money a business earns in a given period by selling goods and services. 2. The value of what is received for goods sole, services rendered.
REVENUE
1. The chance of loss, the degree of probability of loss, and the amount of possible loss. 2. The chance an entrepreneur takes of losing time and money on a business that may not prove profitable. 3. A situation in which the decision maker is able to estimate the likelihood of certain outcomes.
RISK
Minimizing potential losses by preventing, avoiding, or reducing risk.
RISK CONTROL
Ways of coping with risk that are designed to preserve the assets and earning power of a firm.
RISK MANAGEMENT
The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required.
RISK RETURN/TRADE-OFF
Fees paid by the licensee to the licensor for each unit produced under a licensing contract.
ROYALTIES
Competitive forces in an industry, if kept relatively free of government interference or other special circumstances, will inevitably create a situation where three companies dominate any given market.
RULE OF THREE
Direct inducements offering added value or some other incentive for buyers to enter into an exchange.
SALES PROMOTION
A prediction of how much a product or service will be purchased within a market during a specified time periods.
SALES FORECAST
A financial institution that accepts both savings and checking deposits and provides home mortgage loans.
SAVINGS AND LOAN ASSOCIATION (S & L)
The part of the FDIC that insures holders of accounts in savings and loan associations.
SAVINGS ASSOCIATION INSURANCE FUND (SAIF)
A loan backed by something valuable, such as property.
SECURED LOAN
Federal agency that has responsibility for regulating the various exchanges.
SECURITIES AND EXCHANGE COMMISSION (SEC)
Distribution that sends products to only a preferred group of retailers in an area.
SELECTIVE DISTRIBUTION
Organizations that produce nonphysical outputs in the form of services.
SERVICE ORGANIZATIONS
Intangible products such as education, health care, and insurance.
SERVICES
Providing fast, friendly service during and after the sale and by teaching customers how to best use products over time.
SERVICE UTILITY
Borrowed capital that will be repaid within one year.
SHORT-TERM FINANCING/ NOTES
Forecast that predicts revenues, costs, and expenses for a period of one year or less.
SHORT-TERM FORECAST
A national culture attribute that emphasized the past and present, respect for tradition, and fulfilling social obligations.
SHORT-TERM ORIENTATION
A checkbook system of accounting reflecting only receipts and disbursements.
SMALL BUSINESS ADMINISTRATION (SBA)
Strategy in which a new product is priced very high for a limited period to make optimum profit while there’s little competition and drops later to more competitive levels.
SKIMMING PRICE STRATEGY
A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration—does not employ more than 500 people) in terms of employees or annual receipts.
SMALL BUSINESS
An electronic funds transfer tool that is a combination credit card, debit card, phone card, and more.to small businesses.
SMART CARD
An economic system based on the premise that most basic industries should be owned and operated by the government so that profits can be evenly distributed among the people but individuals own most businesses.
SOCIALISM
Products that have a special attraction to consumers who are willing to go out of their way to obtain them.
SPECIALTY GOODS AND SERVICES
A chance of either profit or loss.
SPECULATIVE RISK
Those people who stand to gain or lose by the policies and activities of an organization; any constituencies in the organization’s external environment that are affected by the organizations decisions and actions.
STAKEHOLDERS
Financial statement that reports cash receipts and disbursement related to a firm’s three major activities: operations, investment, and financing.
STATEMENT OF CASH FLOWS
1. A long-term partnership/organizational relationship between two or more companies established to help each company build competitive market advantages or other common endeavor. 2. An approach to going global which involves partnerships between an organization and a foreign company in which both share resources and knowledge in developing new products or building production facilities.
STRATEGIC ALLIANCE
The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
SUPPLY
The ability to outperform rivals in ways that are difficult or costly to imitate.
SUSTAINABLE COMPETITIVE ADVANTAGE
Designing a product so that it satisfies customers and meets the profit margins desired by the firm.
TARGET COSTING
Marketing directed toward those groups (market segments) an organization decides it can serve profitably.
TARGET MARKETING
A tax imposed on imported products/goods.
TARIFF
An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies.
TAX ACCOUNTANT
How the government (federal, state, and local) raises money.
TAXES
A promissory note that requires the borrower to repay the loan in specified installments.
TERM-LOAN AGREEMENT
The technical name for a savings account; the bank can require prior notice before the owner withdraws money from a time deposit.
TIME DEPOSIT
The ratio of sales to total assets, showing the efficiency with which a firm’s assets are used to generate sales.
TOTAL ASSET TURNOVER
All the expenses that remain the same no matter how many products are sold; costs that remain constant as the quantity produced or sold varies.
TOTAL FIXED COSTS
The practice of buying goods and services now and paying for them later;. Financing provided by a supplier of inventory to a given company.
TRADE CREDIT
An unfavorable balance of trade; occurs when the value of a country’s import exceeds that of its exports.
TRADE DEFICIT
A trip organized to help small business owners meet with potential buyers abroad and learn about cultural and regulatory obstacles in foreign markets.
TRADE MISSION
The use of government regulations to limit the import of goods and services; advocates believe that it allows domestic producers to survive and grow, producing more jobs.
TRADE PROTECTIONISM
Price charged by one unit for a product or service provided to another unit within the organization.
TRANSFER PRICE
A company that maintains significant operations in more than one country but decentralizes management to the local country.
TRANSNATIONAL CORPORATION (TNC)
A summary of all the data in the account ledgers to show whether the figures are correct and balanced.
TRIAL BALANCES
The lack of funds to operate a business normally.
UNDERCAPITALIZATION
The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four seeks.
UNEMPLOYMENT RATE
A loan that is not backed by any specific assets.
UNSECURED LOAN
An economic term that refers to the value or want-satisfying ability that is added to goods or services by organizations when the products are made more useful or accessible to consumers than before.
UTILITY
Good quality at a fair price; when consumers calculate the value of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs; that for which customers are willing to give up resources ($$).
VALUE
When marketers provide consumers with brand-name goods and services at fair prices.
VALUE PRICING
Costs that change according to the level of production.
VARIABLE COSTS
Setting more than one price for a good or service in order to offer price concessions to certain customers (e.g. wholesale v. retail, quantity pricing, etc.).
VARIABLE PRICING STRATEGY
Money that is invested in new companies that have great profit potential.
VENTURE CAPITAL
Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.
VENTURE CAPITALISTS
A bank with no building to go to.
VIRTUAL BANK
A loan that is not backed by any specific assets.
UNSECURED LOAN
A marketing intermediary that sells to other organizations.
WHOLESALER
A promotional tool that involves people telling other people about products they have purchased.
WORD OF MOUTHOMOTION
The daily flow of resources through a firm’s working-capital accounts.
WORKING CAPITAL CYCLE
The management of current assets and current liabilities.
WORKING CAPITAL MANAGEMENT
The bank primarily responsible for financing economic development; also known as the International Bank for Reconstruction and Development.
WORLD BANK
The international organization that replaced the General Agreement on Tariffs and Trade, deals with the rules of trade among nations, and was assigned the duty to mediate trade disputes among nations.
WORLD TRADE ORGANIZATION (WTO)
The lack of funds to operate a business normally.
UNDERCAPITALIZATION
The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four seeks.
UNEMPLOYMENT RATE
A loan that is not backed by any specific assets.
UNSECURED LOAN