10-K (Form 10-K) This form is filed annually with the SEC for publicly owned companies. The report includes audited financial statements and other detailed financial information.
10-Q (Form 10-Q) This form is filed quarterly with the SEC by publicly owned companies. It contains unaudited financial information. The company’s auditors may perform reviews of this information, but their work is substantially smaller in scope than an audit.
401(K) Plan Allows employees to receive cash or to have employer contributions from profit-sharing and stock bonus plans placed into a tax-deferred account.
8-K (Form 8-K) This is a current report filed for any month in which significant events occur for a company subject to SEC rules.
A Priori A generalization resting on presuppositions, not upon proven facts.
A. K. A. “Also known as”
Abandonment Abandonment of property is giving dominion and control over it, with intention to relinquish all claims to it.
Abatement of a Nuisance An action to end any act detrimental to the public.
Absentee Owner A landlord who resides elsewhere and leaves the property management to others.
Absolute Advantage 1. A situation in which a nation has a monopoly on a product or can produce it at the lowest cost;
2. The ability to produce something with fewer resources than other producers would use to produce the same thing.
Accelerated Depreciation A depreciation method that provides for a high depreciation expense in the first year of use of an asset, and a gradually declining expense thereafter.
Acceleration Clause A provision in a note or contract which allows the holder to declare the remaining balance due and payable immediately upon the occurrence of a default in the obligation.
Acceptance Under Article 3 Commercial Paper, this is the drawee’s signed engagement to honor a draft as presented. It must be written on the draft and may consist of the drawee’s signature alone. It becomes operative when completed by delivery or notification.
Acceptance Sampling A quality control procedure in which a sample is taken and a decision to accept or reject a whole lot is based on a calculation of sample risk error.
Acceptance View of Authority The theory that authority comes from the willingness of subordinates to accept it.
Accessory Equipment Capital items that are less expensive and shorter lived than installations, or major assets of a company.
Accommodation Resolving conflicts by placing another’s needs and concerns above one’s own.
Accommodation Indorser (Endorser) One who places his indorsement on commercial paper without compensation, in effect as a guarantee of payment.
Accord and Satisfaction An agreement between two persons, one of whom has a right of action against the other, that the latter should do or give, or the former accept, something in satisfaction in the right of action.
Account Any right to payment of goods sold or leased or for services rendered but not evidenced by an instrument or chattel paper. Under Article 4 Bank Deposits And Collection, account is any account with a bank that includes a checking, time, interest or savings account.
Account Balance The dollar amount currently remaining in an account.
Account Debtor The person who is obligated on an account, chattel paper, contract right, or general intangible.
Account Payable A liability created by a purchase made on credit.
Account Receivable A claim against a customer for services rendered or goods sold on credit.
Account Reconciliation A disbursement related service in which the bank develops a detailed report of checks paid as well as miscellaneous debits and stopped payments. In a full account reconciliation, the company also provides the bank with a record of checks drawn and the bank informs the company which checks remain outstanding.
Accountability 1. Having to answer to someone for your actions;
2. One who assumes total responsibility for the consequences of an activity.
Accountant A person who has the education and experience to evaluate the significance of information derived from a company’s financial records, interpret its impact on operations, and participate in higher management decisions that are made as a result.
Accountee The applicant of a letter of credit.
Accounting The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.
Accounting Cycle The sequence of basic accounting procedures during a physical period.
Accounting Equation The expression of the relationship between assets, liabilities, and owner’s equity; it is most commonly stated as assets = liabilities + owner’s equity.
Accounting Period Concept An accounting principle that requires accounting reports be prepared at periodic intervals.
Accounting System 1. An organized approach to gathering, recording, analyzing, summarizing, and interpreting financial data to determine a firm’s financial condition;
2. The methods and procedures used by a business to record and report financial data for use by management and external users.
Accounts Receivable Financing An agreement with a bank, factor or other source of financing which:
1. Provides a loan secured by the borrower’s accounts receivable;
2. Permits a borrower to retain responsibility for losses;
3. Enables a lender to advance funds on accounts with or without notice to the borrower’s customer, usually an agreed percentage of the face value of the account receivable.
Accounts Receivable Portfolio Risk The aggregate risk across all of the customers in a firm’s receivable portfolio.
Accounts Receivable Turnover An activity ratio measured by the ratio of credit sales to accounts receivable.
Accrual Basis Revenues are recognized in the period earned, and expenses are recognized in the period incurred in the process of generating revenues.
Accruals Expenses that have been incurred or revenues that have been earned but have not been recorded.
ACH The Automated Clearing House system used to transfer payments electronically.
Acid Test (Quick Ratio) An indicator of a company’s financial strength. Calculated by taking current assets less inventories, divided by current liabilities.
Acid Test Ratio A measure of a firm’s ability to pay current debts from its most liquid, or quick, assets. Found by dividing the sum of cash, accounts receivable, and marketable securities by current liabilities.
Acknowledgment The statement of a competent officer, usually a notary public, that the person that has executed an instrument has appeared before the officer and sworn to the facts of its execution.
Acquisition The result when one firm buys majority interest in another, but both retain their identities.
Action A suit at law or in equity.
Action Ex Contractu An action at law to recover damages for the breach of a duty arising out of a contract.
Action Ex Delicto An action at law to recover damages for the breach of a duty existing by reason of a general law.
Actionable Providing grounds for a legal action.
Active Customers Generally referred to as the number of customers who have purchased products in the last 12 months.
Activities The time or resources needed to progress from one event to another in a PERT network.
Activity Ratio A ratio which measures how effectively a corporation is using its assets. Also referred to as a turnover ratio.
Activity-Based Accounting A cost accounting methodology that decomposes the activities that go into producing an organization’s output and then allocating the costs which are not directly variable with output volume according to the activities.
Actuary A person who analyzes the likelihood of loss and the average amount of damage in pure risks and, applying the law of averages, computes the premium that the insurance company should charge to assume the risk.
Additional Dating A request for dating beyond normal terms, generally requested by sales, to induce buyers to place additional orders or orders for special purposes. A before-the-sale event. see “extra dating”
Adequate Disclosure The concept that financial statements and their accompanying footnotes should contain all the pertinent data believed essential to the readers understanding of a business’s financial status.
Adjudicate The exercise of judicial power by hearing, trying, or determining the claims of litigants before the court.
Adjustable Life Insurance Life insurance on which the insured may raise or lower the face value, lengthen or shorten the protection period, or change the kind of protection as personal circumstances require.
Adjuster An agency skilled in determining or settling the amount of a claim or debt.
Adjustment 1. Settlement of a disputed account;
2. A change or concession in price or terms;
3. Determining the amount one is to receive in settlement of a claim;
4. In accounting, an entry made to correct or compensate for an error or difference in an account.
Adjustment Bureau An organization whose function is to supervise extensions, compromise arrangements, or oversee the orderly liquidation of a troubled business for the benefit of creditors.
Administrative Expenses Expenses incurred in the administration or general operations of a business.
Administrative Law The branch of public law dealing with the operation of various agency boards and commissions of government.
Administrator A person to whom letters of administration have been issued by a probate court, giving such person authority to administer, manage, or close the estate of a deceased person.
Adverse Audit Opinion An auditor’s report used when statements are misleading or do not reflect generally accepted accounting principles.
Adverse Selection A situation in which those on the informed side of the market self-select in a way that harms the uninformed side of the market.
Advertising Any non-personal message paid for by an identifiable sponsor for the purpose of promoting products, services, or ideas.
Advertising Expense Money spent on advertising.
Advertising Media The personal or non-personal means of sending a message to a target market.
Advising Bank 1. A bank that gives notification of the issuance of credit by another bank;
2. Usually the beneficiary’s bank in transactions involving a letter of credit. The issuing bank sends the letter of credit through this bank, sometimes referred to as a notifying bank. The payment then goes to the beneficiary.
Advisory Services Include all specialized and general financial management services consulting banks might provide to corporations.
Affidavit A voluntary statement of facts formally reduced to writing, sworn to, or affirmed before some officer authorized to administer oaths.
Affiliate A business entity connected with another through common ownership or management.
Affirmative Action 1. Programs to eliminate the present effects of past discrimination on women and minorities;
2. Requires employers to identify problems in the employment of protected group members and to set goals and take steps to overcome those problems.
Affirmative Defense A matter that constitutes opposition to the allegations of a complaint, which are assumed to be true.
After Tax Income An analysis which focuses on what is left after income tax is paid.
After-Acquired Property Property which a debtor acquires after the execution of a mortgage or other form of indebtedness and which secures the indebtedness.
Agency A person authorized to act for the group when negotiating. He must have the authority to act for the principal and, included in that authority, is the power to undertake the specific transaction.
Agency Coupled with an Interest When an agent has possession or control of the property of his principal and has a right of action against interference by third parties, an agency with an interest has been created.
Agency Credit Ratings Evaluations by certain credit rating services such as NACM, TRW or D&B to assist the credit person in customer evaluation.
Agency for International Development (AID) An agency founded to centralize the U.S. government’s foreign economic aid activities.
Agency Shop A place of employment where nonunion members must pay union dues because the union acts as their agent when bargaining with management.
Agent A person authorized to act for another. An agent is one who stands in place of his principal.
Aggregate Demand The relation between the price level in the economy and the quantity of aggregate output demanded.
Aggregate Income The sum of all income earned by resource suppliers in an economy during a given time period.
Aggregate Output The total quantity of final goods and services produced in an economy during a given time period.
Aging of Accounts Receivable A distribution of outstanding accounts arranged according to the time periods they have been outstanding. Most common classification system is:
Current, (Overdue) 1-30 days, 31-60 days, 61-90 days, and over 91 days.
Aging the Receivables The process of analyzing the accounts receivable and classifying them according to various age groupings, with the due date being the base point for determining age.
Agreement The pact or bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance as provided in the Uniform Commercial Code.
Air Waybill A type of bill of lading that applies to air cargo. It serves as a shipper’s receipt and shows that the carrier has accepted the itemized goods and is responsible for getting the merchandise to the destination.
Alien Corporation A firm incorporated in a country other than the one in which it operates.
All-Risk Physical Damage Added fire insurance coverage that embraces all risk except those that the policy specifically excludes.
Alliances Cooperative business arrangements between two or more businesses with complimentary capabilities.
Allied Lines or Extended Coverage A feature that can be added to a fire insurance policy to encompass financial loss caused by such hazards as riots and civil commotion, hail, wind, falling objects, land vehicles, water, smoke, vandalism, and malicious mischief.
Allocative Efficiency The condition that exists when firms produce the output that is most preferred by consumers.
Allowance (Authorized) A deduction permitted by the seller for damage, shortage, advertising, new store opening, or other promotional event.
Allowance Method A method of accounting for uncollected receivables, whereby advance provisions for the uncollectibles is made.
Amalgamation Occurs when one firm combines with others to form an entirely new company; former identities are relinquished.
Amend To correct an error, modify or alter a legal document.
American National Standards Institute (ANSI) The organization that develops document standards to facilitate electronic communications.
American Standard Code for Information Interchange (ASCII) A standard code for representing letters, digits, and special characters on computer systems.
Amicus Curiae A friend of the court. A term frequently used to designate one who is not a party to the proceeding but who has filed a brief in respect to the issue or principle of law to be decided.
Amortization The periodic expense attributed to the decline in usefulness of an intangible asset.
Analog Computer A computer that takes measurements and processes the data against a model of the problem or situation.
Analytic Process A process in which raw materials are broken down to form new products.
Analyzer A business-level strategy that seeks to minimize risk by following competitors’ innovations but only after they have proven successful.
Annual Credit Sales Total invoiced receivables for any consecutive 12 month period, including freight, taxes, and containers.
Annual Percentage Rate (APR) The annual cost of credit expressed as a percentage. Required under the Federal Truth and Lending Law to disclose the true annual interest on consumer sales, as well as the total dollar cost and other terms of a loan.
Annual Report A yearly record of a publicly held company’s financial condition. It includes a description of the firm’s operations, its balance sheet and income statement. SEC rules require that it be distributed to all shareholders.
Annually Balanced Budget Budget philosophy prior to the Great Depression; aimed at equating revenues with expenditures, except during times of war.
Annuity 1. A sum of money paid yearly to a person during his lifetime. The sum arises out of a contract by which the recipient had deposited sums in whole or part with the grantor. The grantor is to return a designated portion of the principal and interest in periodic payments when the beneficiary attains a designated age;
2. A life insurance contract that pays the policy holder a fixed sum at regular intervals for a specified period of time.
ANSI American National Standards Institute. The organization that develops document standards to facilitate electronic communications.
Antecedent Information Covers the complete business record of the individuals who manage a business enterprise.
Anticipation Discount A deduction that may be taken from the face of the invoice when the bill is paid before the end of the net credit period, but after the cash discount period.
Anticipatory Purchasing A purchasing agent stockpiles an extremely large supply, well in advance of need, anticipating future problems.
Antitrust Activity Government activity aimed at preventing monopoly and fostering competition.
Appellant The party who takes an appeal from one court or jurisdiction to another.
Appellee The party in a case against whom an appeal is taken.
Application Generators Programming systems that facilitate programming for business application systems.
Application Package Commercially available software that addresses a specific type of business application, such as sales tracking, general ledger, or an accounts receivable application.
Application Software Software that processes data to structure and facilitate specific work practices of the users.
Appointment of Receiver May be appointed by the court depending on the policy of a particular court, upon the petition of creditors during bankruptcy proceedings.
Appointment of Trustee At any time after the commencement of a bankruptcy case but before confirmation of the plan, the court upon request and after a notice of hearing, may order the appointment of trustee for cause, including fraud, dishonesty, incompetence, or gross mismanagement.
Appraisal An estimate of the current market value of property.
Appreciation An increase in the value of property.
Appropriation The amount of a corporation’s retained earnings that has been restricted and therefore is not available for distribution to shareholders as dividends.
Arbitrageur A person who takes advantage of a temporary geographic difference in the exchange rate or securities or commodities prices, by simultaneously purchasing in one market and selling in another market.
Arbitration Labor and management empower an impartial third party to act as a judge and hand down a legally binding decision that both sides agreed in advance to accept. The decision is called an award.
Arbitration Clause An agreement incorporated in a sales contract that provides for settlement of disputes by the use of arbitration.
Arithmetic Mean An average found by adding the numbers in an array and dividing by the total number of items present.
Arrangement Setting in order. A term used with respect to certain types of compositions with creditors, such as an arrangement under Chapter 11 or 13 of the Bankruptcy Code.
Arrears 1. Debts, interest or dividends unpaid and overdue;
2. Obligations that have not been met on time, or duties that are unfinished.
Articles of Incorporation The application to incorporate that must be filed with the Secretary of State which becomes the corporation’s charter after it is approved.
Articles of Partnership A contractual agreement that established the legal relationship between partners.
Artificial Intelligence The field of research related to the demonstration of intelligence by machines, including the ability to think, see, learn, understand, and use common sense.
Artisan’s Lien One who has expended labor upon or added to another’s property and is entitled to possession of the property as security until reimbursement for the value of labor or material.
As Of Billing terminology indicating that the terms of the invoice are based on a date other than the invoice creation date. E.g., an invoice created on March 10th, as of the 25th, with terms of 30 days, would be due April 25th.
ASCII American Standard Code for Information Interchange, a standard code for representing letters, digits, and special characters on computer systems.
Assessment Centers Places in which job candidates undergo performance simulation tests that evaluate managerial potential.
Asset Turnover Ratio of net sales to average assets.
Asset-Based Lending 1. A form of collateralized lending which has a claim on an asset or group of assets, ordinarily receivables or inventory, which could be easily sold if the borrower defaults on the loan;
2. May be referred to as factoring, and is generally a non-bank source of funding. The lender will generally possess a lien on accounts receivable, inventory, and possibly other assets. Asset-based lending may be the only alternative for some borrowers if they are unable to negotiate conventional bank financing.
Asset-Based Loans A source of financing obtained from a bank secured by accounts receivable or inventory.
Assets 1. Things of value that businesses, government, or individuals own;
2. Physical items or rights that have value.
Assignee An assign or assignee is one to whom an assignment has been made.
Assignment 1. The transfer by one person to another of a right that usually arises out of a contract;
2. A transfer of the “contract” or of “all my rights under the contract” or an assignment in similar general terms, is an assignments of rights. It is a delegation of performance of the duties of the assignor, and its acceptance by the assignee constitutes a promise by him to perform those duties.
Assignment for the Benefit of Creditors A liquidation technique in which the debtor goes out of business. There are three types of assignments:
1. Common law assignments are a device whereby a debtor transfers title to all his assets to a third party, designated as an assignee or trustee, instructing him to liquidate the assets and make a distribution to his creditors on a prorata basis. The debtor does not receive a discharge from his obligations;
2. Statutory assignments are more formal than a common law assignment, there is an instrument executed by the debtor and recorded, thus giving notice to all parties;
3. Assignment plus settlement, in essence, operates like a common law assignment only results in a settlement. Most often however, it is more advantageous for the debtor to file for protection under the Bankruptcy Code where more competency will likely be given to the administration of the case.
Assignor One who makes an assignment.
Assumpsit A form of action for the recovery of damages for the non-performance of a contract.
Assumption In a mathematical model, a prediction or untested belief concerning particular variables.
Assumption of the Risk Negligence doctrine that bars the recovery of damages by an injured party on the ground that such party acted with actual or constructive knowledge of the hazard causing the injury.
At Sight Words used in a negotiable instrument directing that payment be made upon presentation or demand.
Attachment A legal proceeding accompanying an action in court by which a plaintiff may acquire a lien on a defendants property as a security for the payment of any judgment that the plaintiff may recover.
Attestation The act of witnessing the execution of an instrument.
Attitudes Surveys Eliciting responses from employees through questionnaires about how they feel about their jobs, work groups, supervisors, and the organization.
Attorney at Law A person to whom the state grants a license to practice law.
Attorney in Fact Person acting for another under a grant of special power created by an instrument in writing.
Attribute Sampling A quality control technique that classifies items as acceptable or unacceptable on the basis of a comparison to a standard.
Attribution Theory A theory used to develop explanations of how we judge people differently depending on the meaning we attribute to a given behavior.
Audit An examination to verify the accuracy of accounting and financial records.
Audit (Form of Financial Statement Opinion) The independent auditor’s report which expresses an independent and expert opinion on the fairness of financial statements. The auditors undertake to gather evidence and provide the highest level of assurance that the financial statements follow generally accepted accounting principles, by obtaining an understanding of the company’s internal control, inspecting documents, observing assets, making inquiries within and outside the company, and by performing other auditing procedures to gather evidence necessary to issue an audited report.
Auditing Around the Computer Auditing process in which the auditor views the computer system as a black box and audits inputs and outputs to the system.
Auditing Through the Computer Auditing process in which the auditor attempts to understand and test the computer system’s processing by tracing transactions through it.
Auditor A reputable independent accountant that audits and provides an adequate endorsement of the correctness of a firm’s financial statements.
Autarky A situation of national self sufficiency in which there is no economic activity with foreigners.
Authoritarianism A belief that there should be status and power differences among people in organizations.
Authority 1. The right to commit resources or the legal right to give orders;
2. The rights inherent in a managerial position to give orders and expect them to be obeyed.
Auto Cash A computerized procedure based on a series of algorithms enabling payments to be quickly and automatically applied to a customers account.
Auto Cash Hit Occurs when a check is put through auto cash, and “hits” or matches an open item on a customer’s accounts receivable.
Auto Cash Hit Rate – Checks Of those checks received and applied through auto cash, it is the percent of checks completely applied without manual intervention.
Auto Cash Hit Rate – Invoices Of those checks received and applied through auto cash, it is the percent of invoices shown on the remittance advice that are completely applied without manual intervention.
Auto-Write-Off Tolerance A tolerance built into a cash application routine which will absorb (allow) payment differences without further review.
Autocratic Leadership Style Characterized by decision making solely by the manager; subordinates are excluded from the process.
Automated Cash Application A computerized procedure based on a series of algorithms enabling payments to be quickly and automatically applied to a customer’s account.
Automated Clearing House (ACH) The Automated Clearing House system used to transfer payments electronically.
Automatic Stay A type of injunction brought on by the filing of a bankruptcy petition which bars creditors’ enforcement actions against the debtor or assets of the debtor. Once the automatic stay has been imposed upon the filing of the petition, any action to collect the debt from the debtor or the debtor’s property is prohibited.
Autonomous A term that means independent; an autonomous investment is independent of the level of income.
Autonomy The degree to which a job provides substantial freedom, independence, and discretion to an individual in scheduling and carrying out his work.
Average Collection Period How long the typical customer is taking to pay its bills. It is computed by dividing accounts receivable by daily sales.
Average Cost Method The method of inventory costing that is based on the assumption that costs should be charged against revenue in accordance with the weighted average unit costs of the items sold.
Average Days Delinquent (ADD) An expression in days, of the average time from the invoice due date that the aggregate invoices in the portfolio are unpaid.
Average Fixed Cost Total fixed cost divided by output.
Average Rate of Return A method of evaluating capital investment proposals that focus on the expected profitability on the investment.
Average Revenue Total revenue divided by output.
Average Total Cost Total cost divided by output.
Average Variable Cost Total variable cost divided by output.
Avoidance Withdrawal from or suppression of conflict.

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