C’s of Credit A long standing means of evaluating a customer by investigating: Character, Collateral, Capacity, Conditions, and Capital. The five C’s of credit.
Call Option A contract that allows the owner to purchase the underlying asset at a specific price over a specific span of time.
Call-Back System Security measure permitting entry into a computer system only by returning a user’s log-in call from a specific terminal.
Caller ID Capability of ISDN telephone systems to display a caller’s telephone number to the person receiving the call.
Canceled Check A check that has been paid by the bank and on which the bank has imprinted evidence of payment so that it cannot be presented again.
Cancellation Either party puts an end to the contract because of breach by the other.
Capacity Refers to a customer’s ability to successfully absorb merchandise and to pay for the merchandise out of the normal operating cycle.
Capacity Planning Assessing an operating system’s ability to produce a desired amount of output units for each type of product during a given time period.
Capital 1. The net assets of an individual enterprise, partnership, joint stock company, corporation, or business institution, including not only the original investment, but also all gains and profits realized from the continued conduct of the business;
2. The total of tools, equipment, machinery, and buildings used to produce goods and services.
Capital Appreciation An increase in a stock’s market price caused by investor optimism.
Capital Expenditure Budget A budget that forecasts investments in property, buildings, and major equipment.
Capital Expenditures Costs that add to the usefulness of assets for more than one accounting period.
Capital Gain or Loss Profit or loss from the sale of a capital asset.
Capital Goods Long-term or long lasting goods such, as buildings and machinery, used to produce goods or products.
Capital Investment Analysis The process by which management plans, evaluates and controls long term capital investments involving property, plant and equipment.
Capital Leases Leases that include one or more of four provisions that result in treating the leased assets as purchased assets in the accounts. They include one or more of the following elements:
1. The lease transfers ownership of the asset to the lessee at the end of the lease term;
2. The lease contains an option for a bargain purchase of the asset by the lessee;
3. The lease term extends over most of the economic life of the asset;
4. The lease requires rental payments that approximate the fair market of value of the asset.
Capital Stock All shares representing ownership of a business, including common and preferred stock.
Capital Turnover The productivity of capital or sales divided by invested capital.
Capitalism An economic system where the factors of production are in private hands.
Capitalization A term used by investment analysts to indicate stockholders’ equity plus bonds outstanding. Can also mean that a cost is considered an asset on the balance sheet.
Captive Supplier A vendor firm in which the customer owns controlling interest or from which it obtains an exclusive supply contract.
Capturing Data Obtaining a representation of the data in a form in which it can be transmitted or stored.
Career The sequence of work-related positions occupied throughout a person’s life.
Carrier A natural person or a corporation who receives goods under a contract to transport for a consideration from one place to another.
Carrier Signal In telecommunications, an oscillatory signal that carries the encoded data and is recognized by both the sending and receiving equipment.
Carrying Value The amount at which a long term investment or a long term liability is reported on the balance sheet.
Cartel A group of firms that agree to coordinate their production and pricing decisions.
Cash Coins, currency, checks, money orders, and money on deposit that is available for unrestricted withdrawal from banks or other financial institutions.
Cash Application Crediting the account upon payment for a credit sale, this process frees up that amount of the credit limit for additional orders for this customer.
Cash Basis Revenue is recognized in the period cash is received, and expenses are recognized in the period cash is paid.
Cash Before Delivery (CBD) The seller may prepare and package merchandise but will not ship until payment is received.
Cash Budget A budget that forecasts how much cash an organization will have on hand and who much it will need to meet expenses.
Cash Collection System A management designed system that converts checks to cash and considers mail float, processing, and availability float.
Cash Concentration The process of moving dollar balances from deposit banks to concentration banks.
Cash Cows Products that demonstrate low growth but have a high market share.
Cash Cycle The time that elapses from the purchase of raw materials until cash is received from the sale of the final product.
Cash Discount 1. A discount given to encourage trade credit debtors to pay their balances before they are due;
2. A premium which the seller is willing to pay for certain benefits that accompany prompt turnover of accounts receivable.
Cash Dividend A cash distribution of earnings by a corporation to its shareholders.
Cash Equivalent Highly liquid investments that are usually reported on the balance sheet with cash.
Cash Flow Provides information regarding a company’s cash receipts and cash payments during an accounting period. The statement of cash flow is based on an activity format, which classifies cash inflows and outflows in terms of operating, investing, and financing activities.
Cash In Advance (CIA) Orders from customers are not processed until advanced payment has been received and cleared.
Cash Inflow Cash coming into the company as the result of a previous investment.
Cash On Delivery (COD) The seller requires that the buyer pay for goods upon receipt.
Cash Outflow Cash invested in a project.
Cash Pay-Back Period The expected period of time that will elapse between the date of a capital expenditure and the complete recovery in cash in the amount invested.
Cash Terms 1. Short credit periods, ordinarily a week or two, for products involving weekly or scheduled deliveries. These terms apply to drop deliveries, such as gasoline and perishable foods, with payments being made for the previous shipment on delivery of each new shipment;
2. Sometimes used for customers in financial difficulty.
Cash With Order (CWO) Orders from customers are not processed until advanced payment has been received and cleared.
Cashier’s Check 1. A check written by a commercial bank against the bank’s own money;
2. A bill of exchange drawn by the cashier of a bank, for the bank, upon the bank. After the check is delivered or issued to the payee or holder, the drawer bank cannot put a stop order against itself.
Cause of Action When one’s legal rights have been invaded either by a breach of contract or by a breach of a legal duty toward one’s person or property, a cause of action has been created.
Cause-Related Marketing Performing social actions that are motivated directly by profits.
Caveat Literally “let him beware.”
Caveat Emptor An old idea at common law, “let the buyer beware.” When a vendor sells goods without an express warranty as to their quality and capacity for a particular use and purpose, the buyer must take the risk of loss due to all defects in the goods.
Caveat Venditor “Let the seller beware.” Unless the seller, by express language, disclaims any responsibility, he shall be liable to the buyer if the goods delivered are different in kind, quality, use, and purpose from those described in the contract of sale.
Cease and Desist Order An administrative agency order directing a party to refrain from doing a specific act.
Central Processing Unit (CPU) Component of a computer that executes machine language instructions.
Centralization 1. A philosophy of organization and management that focuses on the selective concentration of authority within an organizational structure;

2. The physical or logistical concentration of decision-making authority in upper management.

Centralized Processing System A cash collection system where corporate headquarters receives all customer remittance.
Certainty Factors In an expert system, numbers that describe the likelihood of a rule’s conclusion are correct given that its premises are true.
Certificate of Origin A document required by some foreign companies for tariff reasons. It shows the merchandise’s country of origin.
Certificates of Deposit Bank obligations that pay higher interest than regular savings accounts because the depositor agrees to leave the money on deposit for a certain length of time.
Certified Check A depositor’s personal check that the bank certifies to be good.
Certified Public Accountant (CPA) One who has been trained to do accounting and who has passed a state test and received the title of CPA. The title certifies the holder’s qualification to practice accounting, audit, prepare reports and analyze accounting information.
Chain of Command The flow of authority from the top to the bottom of an organization.
Chancery An order issuing out of an appellate court to a lower court, at the request of an appellant, directing that the record of a case pending in the lower court be transmitted for review.
Change An alteration in people, structure, or technology.
The theory of change is identified in three stages:
1. Unfreezing involves creating an awareness of the need for change and a climate of receptivity to change;
2. Moving is changing the forces and behaviors that define the initial situation, developing new methods, or learning new attitudes and behaviors;
3. Refreezing is reinforcing the changes that have occurred, thereby maintaining the new work practices.
Note, contemporary thought has popularized the theory that change is constant.
Change Agents People who act as catalysts and manage the change process.
Change in Demand A shift in a given demand curve, caused by a change in one of the determinants of demand for the goods.
Change in Quantity Demanded A movement along the demand curve for goods in response for a change in the price of goods.
Change in Quantity Supplied A movement along the supply curve for goods in response for a change in the price of goods.
Change in Supply A shift in a given supply curve, caused by a change in one of the determinants of the supply of goods.
Channel of Distribution A route that goods follow on their journey from producers to consumers.
Chapter 11 The rehabilitation proceedings set forth by the Bankruptcy Code that allows a debtor to operate the business as a “debtor in possession” with the protection of the “automatic stay.” The debtor acts as a trustee in a Chapter 11 case.
Chapter 13 Chapter 13 of the Bankruptcy Code permits an individual debtor to develop a repayment plan. In fact, it is referred to as “Adjustments of Debts of an Individual with Regular Income.” They have regular income but cannot pay their bills.
Chapter 7 A liquidation bankruptcy in which a trustee is appointed in every case to liquidate nonexempt assets. Debtors are forced to sell most of their property and use the cash to pay their creditors a portion of the amount owed each.
Character Information gathered about a customer to evaluate the customer’s reputation, responsibility, integrity, honesty, punctuality, and consistency.
Charge Off A partial or complete reduction of the value of an asset.
Chargeback A notice sent by the seller advising a customer that they made an unauthorized deduction from a merchandise invoice. A debit memo. Depending upon company policy, chargebacks may or may not be included in an aging of accounts receivable. Sometimes chargebacks are not posted, and are held in a memo status in the A/R.
Chargeback System An accounting system that assigns to user organizations, costs for information systems and related resources.
Chart of Accounts The system of accounts that make up the ledger for a business.
Charter Referring to a private corporation, charter includes the contract between the created corporation and the state, the act creating the corporation, and the articles of the association granted to the corporation by the legislative act.
Chattel 1. A very broad term. Includes every kind of property that is not real estate, such as horses, automobiles, stock certificates and bills of lading;
2. Any type of personal property as distinguished from real property.
Chattel Paper A writing evidencing both a monetary obligation and a security interest in specific goods.
Chauffeur A technical expert who runs an interactive system while decision makers think about the results it produces.
Check (Demand Deposit) A bank depositor’s written order instructing the bank to pay a certain sum to a third party.
Check Collection A process used to collect returned customer checks when the customers do not voluntarily comply with providing replacement funds. As the seller, a customer’s check is presented to your bank for collection, your bank presents the check to the customer’s bank collection department as a collection item. The customer’s bank collection department holds the check and collects on the referred check once there are sufficient funds in the customer’s account.
Check Kiting A scheme whereby numerous NSF checks are deposited into at least two bank accounts in a circular fashion. The deposits and withdrawals are structured in such a way as to create the illusion of cash flow.
Checkable Deposits Deposits in financial institutions against which checks can be written.
Chosen Action The “right” one person has to recover money or property from another by a judicial proceeding.
Circumstantial Evidence If, from certain facts and circumstances, according to the experience of mankind, an ordinary, intelligent person, may infer that other connected facts and circumstances must necessarily exist, the latter facts and circumstances are considered proven by circumstantial evidence.
Civil Action A proceeding in a law court or a suit in equity by one person against another, for the enforcement or, protection of a private right or the prevention of a wrong.
Civil Law The area of law dealing with rights and duties of private parties as individual entities.
Claim 1. A legal demand for payment, reimbursement or compensation for a loss or injury;
2. A past due account placed for collection by a creditor.
Claimant One who makes a claim or asserts a right.
Classical Economics The ideas of a group of eighteenth and nineteenth century British economists who criticized mercantilism, and believed that self interest and competition promoted economic development.
Classical View The view that management’s only social responsibility is to maximize profits.
Classification of Accounts See “Classification of Accounts” Appendix 1 of Glossary
Cleanup Period The cleanup period is a condition where a borrower must be debt free of the bank for a period of generally 30 to 60 days. Its purpose is to safeguard the bank against a credit line being renewed by the customer without reducing its exposure.
Clearance An exchange of credit information with others within an industry or through a credit agency interchange.
Clearing House Interbank Payment System (CHIPS) The institution that established interbank transactions needed to settle international transactions.
Clearinghouse Under Article 4 Bank Deposits and Collections, a clearinghouse is any association of banks or other payers regularly clearing items.
Client-Server The technology used on networked systems which allow users (clients) to “borrow” the data from a server computer, for manipulation to meet the user’s specifications.
Client-Server Architecture Computer system architecture consisting of client devises which send requests for service and server devices which perform the requested processing.
Closed Corporation A corporation whose stock cannot be purchased by the general public; it is usually owned by a few individuals.
Closed Shop Agreements stipulating that employees had to be union members at the time they were hired.
Closed Systems Systems that neither are influenced by nor interact with their environment.
Cloud on Title Some evidence on record that shows a third person has some prima facia interest in another’s property.
Co-Payment Requires employees to pay part of insurance premium costs.
Code A collection or compilation of the statues passed by the legislative body of the state.
Code of Ethics 1. Formal guidelines for the ethical behavior of individuals in an organization, job, or profession;
2. A formal statement of an organization’s primary values and the ethical rules it expects its employees to follow.
Codetermination A practice whereby union or worker representatives are given position’s on a company’s board of directors.
Coercive Power Power that is dependent on fear.
Cognitive Dissonance Any incompatibility between two or more attitudes or between behavior and attitudes.
Coinsurance Clause A stipulation that a company must insure a minimum, usually 80% or more, of a property’s total value before the business will be fully reimbursed for a partial loss.
Coinsurer A term in a fire insurance policy that requires the insured to bear a certain portion of the loss when he fails to carry complete coverage.
Collaboration Resolving conflict by seeking a solution advantageous to all parties.
Collateral 1. With reference to debts and other obligations, collateral means security placed with a creditor to assure the performance of the obligator;

2. Property subject to a security interest.

Collateral Security A separate obligation which is given to secure the performance of the primary obligation in a contract.
Collected Balance Sometimes called the available balance, this amount represents how much of the available deposit is immediately available to spend.
Collecting Bank Under Article 4 Bank Deposits and Collections, any bank handling the item for collection except the payer bank.
Collection Agency Firms experienced in the collection of delinquent accounts.
Collection by Attorney Delinquent accounts placed with an attorney for collection.
Collection Charges 1. Fees charged by a bank for collecting drafts, notes, coupons or other instruments;

2. Compensation paid to a collection agency or attorney for collecting delinquent accounts.

Collection Effectiveness Index (CEI) A calculation that establishes an index of a receivables portfolio developed by Dr. Venkat Srinivasan (SR Research) and the Credit Research Foundation, that expresses the collection efforts over time. The closer to 100%, the more effective the collection effort. It is a measure of the quality of the collection of receivables, not of time. Without extraordinary circumstances (such as huge credits that appear in past due columns of an aging analysis) this figure should not exceed 100%.
Collection Letter A letter sent to a customer when the account becomes delinquent.
Collection Policy A clear general policy covering the actual collection process.
Collection Procedures Detailed statements regarding when and how the company will carry out collection of past due accounts.
Collective Bargaining The process of good faith negotiations between employers and employees representatives, concerning issues of mutual interest.
Collectivism A cultural dimension in which people expect others in their group to look after them and protect them when they are in trouble.
Collision Calculation of the same location for two different records while storing or receiving data in a computer system.
Collision and Upset Motor vehicle insurance that pays the repair damage to the insured vehicle up to its actual cash value less the deductible if it collides with an object or overturns.
Comaker A person who signs and guarantees the note of another and by so doing promises to pay in full.
Combination Settlement A prorata cash settlement combined with an extension of time.
Combination Strategy A corporate-level strategy that pursues two or more of the following strategies: stability, growth or entrenchment, simultaneously.
Comfort Letter A letter of financial assurance obtained by the credit department from a domestic or foreign parent of a customer to whom credit is being extended.
Command Economy An economic system characterized by centralized economic planning and public ownership of resources.
Commerce Trade of goods on a large scale between nations or between different parts of the same country.
Commerce Clause Article 1, Section 8, Clause 3, of the Constitution of the United States, granting Congress the authority to regulate commerce with foreign nations and among the states.
Commercial Attorney A lawyer in the general practice of law, knowledgeable in the field of creditors’ rights and remedies and active in the handling of insolvencies and commercial collections.
Commercial Bank A profit-making corporation that accepts customers’ deposits and lends them out to businesses and individual borrowers.
Commercial Collection Agency Section of the Commercial Law League of America A professional organization of commercial collection agencies.
Commercial Credit 1. Arises from a sale of goods by a manufacturer or by a distributor to another manufacturer or retailer;

2. The measure of the ability of a business to secure goods to be used commercially in exchange for a promise to pay at some specific future time.

Commercial Finance Company A firm that makes cash loans to business borrowers securing the loans by such assets as trade credit accounts, inventory, or equipment.
Commercial Law League of America (CLLA) A national membership organization of commercial attorneys, commercial credit and collection agencies, credit insurance companies and law list publishers.
Commercial Letter of Credit A guarantee of payment by an importer, made by its bank, which becomes binding when the shipping and other documents related to the goods sold are presented to the bank.
Commercial Paper The unsecured promissory notes of large, financially sound corporations.
Commercial Unit A unit of goods that, by commercial usage, is a single whole for the purposes of sale.
Commission 1. The sum of money, interest, compensation, or allowance given to a factor or broker for carrying on the business of his principal;

2. A percentage paid to a sales person of a price of each item sold.

Commission Merchant An agent employed to sell “goods, wares, and merchandise” consigned or delivered to him by his principal.
Commitment Fee An annual fee of between .25 and .50% of the size of the credit line, a firm pays to the bank to guaranty access to the line.
Committee Structure A structure that brings together a range of individuals from across functional lines to deal with problems.
Common Carrier One who is engaged in the business of transporting personal property from one place to another for compensation.
Common Law The body of law deriving from judicial decisions, as opposed to enacted through legislative statues.
Common Size Analysis Analysis which expresses each expense on the income statement as a percentage of total revenues, and each asset, liability, or equity account on the balance sheet as a percent of total assets.
Common Stock A security held by the corporation’s owners; the basic ownership class of corporate stock.
Common Stock Certificate Legal evidence of corporate ownership; it gives the owner’s name, the number of shares owned, and various data on the corporation itself.
Communication The transferring and understanding of meaning.
Communications Process The channel promotional messages travel to reach the purchaser.
Communism An economic system in which the government controls the factors of production.
Community Property All property acquired after marriage by husband and wife, other than separate property acquired by devise, bequest, or from the proceeds of non-community property.
Compa-Ratio A pay level divided by the midpoint of the pay range.
Compact Disc Read Only Memory


A compact optical disk used for storing data that can be read but not changed by users.
Comparable Worth The concept that jobs requiring comparable knowledge, skills, and abilities should be paid similarly.
Comparative Advantage 1. A nation is better equipped to produce one product or service than other nations;

2. The ability to produce something at a lower opportunity cost than other producers face.

Comparative Analysis Is a study of trends indicated in an item-by-item comparison of two or more successive financial statements of the same company.
Compatibility Degree of consistency between the standards and logic of two systems.
Compensating Balances Amounts held in a deposit account which the company holds to offset bank-provided cash management and or lending service fees.
Compensatory Time

(Comp Time)

Time off from work given in lieu of payment for time worked.
Competition The effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms.
Competitive Advantage Advantage of one product verses another in terms of cost, features, or other characteristics.
Competitor Intelligence Environmental scanning activity that seeks to identify who competitors are, what they are doing, and how their actions will affect the focus organization.
Compilation (Type of Financial Statement) Involves the preparation of financial statement by the CPA with no attempt to verify the fairness of the presentation.
Compiler A program that translates higher level language programs into machine language.
Complaint 1. The first paper a plaintiff files in a court in a law suit;

2. Merely an indication of employee dissatisfaction, which has not been taken the formal grievance settlement route.

Complements Goods that are related in such a way that an increase in the price of one, leads to a decrease in the demand for another.
Completed-Contract Method The method that recognizes revenue from long-term construction contracts when the project is completed.
Complexity The amount of differentiation in an organization.
Composition of Creditors An agreement among creditors and their debtors by which the creditors will take a lessor amount in complete satisfaction of the total debt.
Compound Interest In computing interest, the interest is added to the principal at the end of each fiscal period; for the next period, interest is computed on the new principal
Comprehensive Physical Damage Motor vehicle insurance that protects the insured vehicle against most damage except that caused by collision and upset.
Compressed Work Week A work week comprised of four ten-hour days.
Compromise 1. An agreement between two or more persons usually opposing parties in a law suit, to settle the matters in a controversy without further result to hostile litigation;

2. A solution to conflict in which each party gives up something of value.

Compromise Settlements There are two (2) types of situations which may lead to compromise settlement:

1. A debtor places his assets in the hands of his creditors so that they can be converted into cash and prorated among his creditors;

2. A debtor writes to his creditors and offers such a settlement.

Computer Programmable device that can execute previously stored instructions.
Computer Added Design (CAD) Use of a computer to support a design process.
Computer Added Software Engineering (CASE) Use of computerized systems to improve the process of analyzing, designing, developing, and maintaining information systems.
Computer Integrated Manufacturing (CIM) Combines the organization’s strategic business plan and manufacturing plan with state-of-the-art computer applications.
Computer Output Microfilm A form of computer output that bypasses paper and shrinks pages of output to tiny images stored on film.
Computer Program A set of instructions in a programming language that describe the data processing to be performed by a computer.
Computer System A system consisting of computers and computer-controlled devices that process data by executing programs.
Concealment Is committed if the debtor has concealed assets with intent to hinder, delay, or defraud his creditors.
Concentration Number of firms in an industry, measured by the number of firms producing 50% of output in the industry.
Concentration Account Deposit account into which funds are pooled at the end point of a company’s collection system.
Concentration Bank A bank that receives balance transfers from several deposit or gathering banks.
Concentration Ratio A measure of the market share of the largest firms in an industry.
Conceptual Skill The mental ability to view the organization as a whole and to see how the parts of an organization relate to and depend on one another; the ability to imagine the integration and coordination of the parts of an organization, all its processes and systems.
Conciliation A process in which an outside entity attempts to help two deadlocked parties continue negotiation and derive at a solution. (also called a mediation)
Concurrent Control Control that occurs while an activity is in progress.
Concurrent Manufacturing Using a cross-functional team to define the product and how it will be manufactured and marketed.
Condemnation Proceedings An action in court authorized by legislation for the purpose of taking private property for public use.
Condition A clause in a contract either expressed or implied, that has the effect of investing or divesting the legal rights and duties of the parties to the contract.
Condition Precedent A clause in a contract providing that immediate rights and duties shall vest only upon the happening of some event.
Condition Subsequent A clause in a contract providing for the happening of an event that divests legal rights and duties.
Conditional Endorsement If X, the payee of a note, endorses to Y on the condition that X is awarded a certain contract from Y, this condition would be completely operative between X and Y.
Conditional Maintenance Maintenance that calls for an overhaul or repair in response to an inspection.
Conditional Sale An installment sale in which the goods are delivered to the buyer, but title remains with the seller until the goods are paid for.
Conditions Concurrent Are mutually dependent and must be performed at the same time by the parties of the contract.
Confession of Judgment Note A confession is a security devise which assures creditors of an easy means of entering a judgment without the necessity of going to trial. Since the confession of judgment can usually be entered without even advising the debtor, this practice has become subject to criticism as violative of one’s constitutional rights of due process. Note: If a confession of judgment is used as a security advise in consumer transactions, the creditor should be certain that the execution of the confession meets the requirements of the truth in lending act. Under recent Federal Trade Commission rules, use of a confession of judgment is deemed an unfair consumer practice. Refer to each state’s laws on confession of judgment.
Confidence Indicator A measure of an investor’s faith in the economy and the securities market.
Confidence Level The degree of assurance that a specified failure rate is not exceeded.
Confirmation of the Plan If the requisite majority approves the plan, the court fixes a date upon or before which the debtor must deposit a distribution of funds necessary to take care of initial payments; the receiver must file his account; and all applications for compensation must be filed.
Confirmed Letter of Credit The confirming bank, in addition to the issuing bank, promises to honor the letter of credit.
Confirming Bank A bank that engages either that; it will itself honor a credit already issued by another bank, or that such a credit will be honored by the issuer or a third bank.
Conflict Perceived incompatible differences that result in interference or opposition.
Conformation 1. A supplier’s written acknowledgment that it has accepted a buyer’s order;

2. A customer’s written verification of an order previously placed.

Conforming Goods or conduct, including any part of a performance, are conforming or conform to the contract when they are in accordance with the obligation under contact.
Conglomerate Merger Merging of companies that have neither the relationship of competitors nor that of supplier and customer.
Consent Decree A legal agreement through which the accused party, without admitting guilt, agrees to refrain in the future from certain illegal activity, if the government drops the charges.
Conservatism The concept that dictates that in selecting among alternatives, the method or procedure that yields the lesser amount of net income or asset value should be selected.
Consideration 1. An essential element in the creation of contract obligation;

2. The extent to which a person has job relationships characterized by mutual trust, respect for subordinates’ ideas, and regard for their feelings.

Consignee A person to whom a shipper usually directs a carrier to deliver goods; generally the buyer is called a consignee on a bill of lading.
Consignment The delivery, sending, or transferring of property in the possession of another, usually for the purpose of sale.
Consignment (International) The consignor (exporter) delivers merchandise to the consignee (importer/agent) under agreement that the agent pay the exporter.
Consignment Sale A sale of goods for which the seller is not paid until the buyer (retailer) has sold the merchandise. Seller retains title to such goods until the retailer has sold the merchandise and payment is made by the buyer.
Consignor The shipper who delivers freight to a carrier for a shipment and who directs the bill of lading to be executed by the carrier.
Consistency The concept that assumes that the same generally accepted accounting principles have been applied in preparing successive periods.
Consolidated Statements Financial statements resulting from combining parent and subsidiary company statements.
Conspicuous A term or clause is conspicuous when it is written so that a reasonable person against whom it is to operate ought to have noticed it.
Conspiracy A combination or agreement between two or more persons for the commission of a criminal act.
Constant Dollar Data Historical costs that have been converted into dollars of constant value through use of price-level index.
Constructive Delivery Although physical delivery of personal property has not occurred, the conduct of the parties may imply that possession and title has passed between them.
Constructive Discharge Most often found when an employer deliberately makes conditions intolerable in an attempt to make employees quit.
Consumer Buying Motives Factors that cause someone to purchase a product for personal use.
Consumer Credit Is extended to the individual consumer who uses the goods and services produced by industry.
Consumer Finance Company A company that lends money to final consumers on their promissory notes.
Consumer Goods Goods that are used or bought for use primarily for personal, family, or household purposes.
Consumer Market Individuals that buy products for their personal use.
Consumer Price Index (CPI) 1. A figure that measures changes in purchasing power and the rate of inflation by expressing today’s prices in 1967 dollars;

2. A measure over time of the cost of a fixed “market basket” of consumer goods and services.

Consumer Products Goods intended for the personal use of the consumer.
Consumption All household purchases of final goods and services.
Consumption Possibility Schedule A schedule reflecting the alternative consumption possibilities availability in an economy.
Contingency Approach Recognizing and responding to situational variables as they arise.
Contingent Business Interruption Insurance Insurance that covers a firm’s losses when a key supplier’s or customer’s business is damaged.
Contingent Fee An arrangement whereby an attorney is compensated in a lawsuit according to an agreed percentage of the amount of money recovered.
Contingent Liabilities Potential obligations that will materialize only if certain events occur in the future.
Contingent Workers Temporary and part-time workers who supplement an organization’s permanent work force.
Continuing Resolution Budget agreements that allow agencies in the absence of an approved budget, to spend at the rate of a previous year’s budget.
Continuous Process Improvement A management approach that is part of the overall total quality management philosophy. The approach requires all employees to constantly improve processes for which they are a part or for which they have managerial responsibility.
Contra Account Accounts that are offset against other accounts.
Contract Total obligations that results from the parties agreement as affected by the UCC, and any other applicable rules of law.
Contract Purchasing The company negotiates with the supplier a contract that defines prices, delivery dates, and other conditions of sale.
Contract Rate The interest specified on a bond; sometimes called the coupon rate of interest.
Contract Right Under a contract, any right to payment not yet earned by performance and not evidenced by an instrumental or chattel paper.
Contributed Capital Direct method of raising equity by issuing stock. The amount of money raised from stockholders.
Contribution Margin Sales – variable costs + variable selling expenses + administrative expenses .
Contributory Negligence In a negligence suit, failure of the plaintiff to use reasonable care.
Contributory Plan One in which the money for pension benefits is contributed by both employees and employers.
Control Process The process of measuring actual performance, comparing it against a standard, and taking managerial action to correct deviations or inadequate standards.
Controllability A user’s ability to immediately influence or change what a system does.
Controllable Expenses Cost that can be influenced by the decisions of a manager.
Controlled Disbursement Account A checking account for which the bank provides early morning presentment information via a phone call or computer message to the cash manager.
Controller The chief management accountant of a business.
Controlling A management function of establishing standards measuring actual performance to see if standards have been met, and taking corrective action if required.
Convenience Goods Products purchased with a minimum of effort.
Convergence A theory that economies around the world will grow more alike over time, with poorer countries catching up with richer countries.
Conversion Under Article 3 Commercial Paper, an instrument is converted when a drawee to whom it is delivered for acceptance, refuses to return it on demand.
Conversion (Systems) A process of transferring from a previous system to a successor system.
Conversion Costs The combination of direct labor and factory overhead costs to convert materials into a finished product.
Convertible Bonds Bonds which can be converted at the holder’s option into common stock.
Convertible Security A bond, debenture, or preferred stock that may be exchanged for common stock or other securities.
Conveyance A formal written instrument, usually called a deed, by which the title or other interest in land are transferred from one person to another.
Cooperative An enterprise created and owned jointly by its members and operated for their mutual benefit.
Cooperative Advertising Programs Programs in which the manufacturer agrees to pay part of the advertising costs for the product.
Copyright © A set of legal rights granted to the creator of the original work of authorship, such as an artistic, dramatic, literary, or musical production.
Corporate Charter A document issued by a government that contains all information stated in the original application for a charter plus the powers, rights, and privileges of the corporation as prescribed by law.
Corporate Guarantee A guarantee of payment made by a corporation on behalf of another business entity. The guarantee is provided in consideration of a vendor providing credit to a business on whose behalf the guarantee is made.
Corporate Profits A component of the government measure of national income; the net revenues received by incorporated businesses before corporate income taxes are subtracted.
Corporate Veil Takes for granted that the corporate firm isolates both the individual and parent corporation from liability for corporate misdeeds or actions. To “pierce the corporate veil” is a process of disregarding the corporate entity and imposing a liability for corporate activities on a person or entity other than the offending corporation.
Corporate-Level Strategy Seeks to determine what businesses a corporation should be in.
Corporation 1. A collection of individuals created by statute as a legal person, vested with powers and capacity to: contract; own; control; convey property; and transact business within the limits of the powers granted;

2. A legal form of business organization created by a government and considered an entity separate and apart from its owners.

Corporation De Facto If persons have attempted in good faith to organize a corporation under a valid law, and have failed in some minor particular, but have thereafter exercised corporate powers, they are a corporation de facto.
Corporation De Jure A corporation that has been formed by complying with the mandatory requirements of the law authorizing such a corporation.
Corporeal Physical; perceptible by the senses. Automobiles, grain, fruit, and horses are corporeal intangibles and are called chattels.
Correlation A cause-effect or if-then connection between two or more elements in a group of data.
Cost Accounting System A branch of managerial accounting concerned with accumulating manufacturing costs for financial reporting and decision-making purposes.
Cost Allocation The process of assigning indirect cost to a cost object, such as a job or task.
Cost Center 1. A decentralized unit in which the department or divisional manager has responsibility for the control of cost incurred and the authority to make decisions that affect these costs;

2. A unit in which managers are held responsible for all associated costs.

Cost Method A method of accounting for an investment in common stock, by which the investor recognizes as income its share of cash dividends of the investee.
Cost of Goods Sold The cost of obtaining the merchandise that was sold to produce the net sales.
Cost of Quality Report A report that shows the dollar cost of waste and rework in processes. The report can be used to prioritize and track the effectiveness of continuous process improvement efforts.
Cost Price Approach An approach to transfer pricing that uses cost as the basis for setting the transfer price.
Cost Principle The principle that the monetary record for properties and services purchased by a business should be maintained in terms of actual cost.
Cost Variance The difference between actual cost and the flexible budget of actual volumes.
Cost-Leadership Strategy The strategy an organization follows when it wants to be the lowest-cost producer in its industry.
Cost-Oriented Approach Prices are determined by focusing on cost of merchandise, accompanying services, and overhead costs, and then adding an amount for desired profit.
Cost-Plus Pricing A method of determining the price of a good by adding a percentage markup to the average variable cost.
Cost-Push Inflation 1. Occurs when producers pass rising labor, materials, and other costs on to consumers by increasing prices;

2. A continuos rise in the price level, caused by reductions in aggregate supply.

Cost-Volume-Profit Analysis The systematic examination of the relationships among selling prices, volume of sales and production, costs, expenses, and profits.
Cost/Benefit Analysis A formal comparison of the projected cost of a project with its projected benefits.
Counterclaims By cross-action, the defendant claims that he is entitled to recover from the plaintiff. Claim must arise out of the same transaction set forth in the plaintiff’s complaint and be connected with the same subject matter.
Country Risk The possibility of loss of assets due to political, economic, or regulatory instability in a nation in which business is being conducted.
Coupon or Bearer Bond One with dated coupons attached which the bond holder must cut off and mail to the company to collect interest.
Coupon Rate In bonds, notes or other fixed income securities it is the stated percentage rate of interest, usually paid twice a year.
Course of Dealing A sequence of previous conduct between the parties to a particular transaction.
Covenant Legal term for a written contractual promise. Often times banks incorporate covenants in loan agreements which are legal binding performance requirements under which the debtor has to comply. Violation of covenants will cause the borrower to be in default.
Cover After a breach by a seller, the buyer may cover, by making in good faith and without unreasonable delay, any reasonable purchase of goods in substitution for those due from the seller.
Craft or Trade Unions Associations of workers with a specific skill.
Credit 1. The privilege of buying goods, services or borrowing money in return for a promise of future payment;

2. An engagement by a bank or other person made at the request of a customer that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit.

Credit Administration The establishment of credit policy and planning, organizing, directing and controlling all aspects of the credit function.
Credit Analysis Analysis of financial data to determine the liquidity and debt-paying availability of a firm. It differs from the analysis of the investor or owner, but is similar to that of a banker considering a short-term loan.
Credit Application A form used to obtain personal or business, financial and credit information in order to appraise an applicant’s credit worthiness.
Credit Approval The process followed before the credit decision can be made; essential information about the account must be obtained, analyzed and stored.
Credit Bureau or Credit Agency A firm that investigates the creditworthiness of and assigns a credit rating to a client’s customers or potential customers.
Credit Card A temporary loan usually made through the use of a plastic, encoded, personalized token. Not to be confused with a debit card which is an electronic funds transfer.
Credit Checking (Slang) Examining and analyzing the credit worthiness of a customer.
Credit Department Manual The cornerstone of credit administration for a company. It should be a blueprint for action as well as a training aid for the development of personnel.
Credit Decision Process The sequence beginning with the marketing contact of potential customers and ending with the credit extension decision. It includes a credit investigation, customer information contacts, written document preparation, credit file establishment, and financial analysis.
Credit Extension the decision to sell on credit to a customer.
Credit File A record containing customer contact information, credit ratings, credit history and payment patterns.
Credit Hold Terminology used by the credit department indicating that a customer’s order is not being shipped due to a credit problem such as overexposure or a past due condition.
Credit Insurance Insurance that protects a firm against bad debt losses above a maximum amount on trade credit accounts.
Credit Interchange Bureaus Departments of local credit associations that provide information on the credit history of local businesses and individuals.
Credit Life Insurance Term insurance that pays the remainder of a debt if the debtor dies.
Credit Line

(Credit Limit)

1. A guideline amount of credit that a customer receives after a financial and subjective evaluation;

2. The maximum amount of credit extended by a bank.

Credit Manager A person employed in a business firm to administer credit service to its customers, especially to evaluate the extension and amount of credit to be granted.
Credit Memorandum (Memo) A memo issued to a customer allowing a credit or the reduction of a debit on the customer’s account.
Credit Period The length of time allowable for payment of the invoice.
Credit Policy A general course of action applied to the credit department’s activities in performing the credit function in reoccurring situations. It is designed to achieve established objectives for the company.
Credit Rating A classification of credit risk based on the investigation of a potential customer’s or a customer’s financial resources, prior payment pattern, and personal history or degree of personal responsibility for debts incurred.
Credit Report 1. A report to aid management in reaching credit, sales, distribution and financial decisions;

2. A confidential report containing information obtain from an agency that has investigated the background, credit history, financial strength and the paying record of a company.

Credit Risk 1. The possibility of loss if a debtor defaults on the credit extended;

2. A debtor regarded as likely to default on a loan or credit.

Credit Scoring Models An evaluation approach which weighs variables depending on their helpfulness in discriminating between “good” and “bad” applicants, based on past payment histories. These models are developed with the assistance of computerized statistical techniques such as multiple discriminant analysis.
Credit Squeeze A restraint or limitation of credit.
Credit Standards The minimally acceptable creditworthy customer.
Credit Standing The reputation of a customer for meeting financial obligations.
Credit Terms The details or specifications for the payment of a credit obligation.
Creditworthy Having a satisfactory credit rating.
Creditor Includes a general creditor, a secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors.
Creditors’ Meeting Shortly after the bankruptcy petition has been filed, the case has been referred to a referee, who gives all creditors and interested parties ten (10) days advance notice, in writing, of the time and place for the first meeting of creditors.
Creditor Beneficiary One who, for a consideration, promises to discharge another’s duty to a third party.
Creditors Those to whom the company owes money.
Creditors’ Committee At the first meeting of creditors, a committee of creditors is selected consisting of usually five (5) or seven (7) of the largest unsecured creditors to represent the larger body of creditors.
Crime A violation of a law passed by a legislative body.
Critical Success Factors (CSF) An approach for identifying critical business factors that should have highest priority in system development.
Cross Corporate Guarantee A situation where a creditor requests corporate guarantees of two or more specific corporations on behalf of each other. This is generally used in the case of a parent-subsidiary customer relationship or in the case of multiple related corporations where the credit of one at any time may be marginal and can be strengthened by the credit of the other participating corporations.
Cross-Functional Work Team A group of individuals with various talents, skills, and expertise working together in a unit for the purpose of fulfilling a business process. E.g., a customer financial service team may be made up of a representative from the traditional departments of: credit and collections, customer service, claims and adjustments, etc.
Cross-Price Elasticity of Demand The percentage change in the quantity demanded of goods (holding the price constant) divided by percentage change in the price of other goods.
Cross-Subsidization A firm’s use of revenues from profitable activities to subsidize unprofitable activities.
Crowding in The potential for government to stimulate private investment in an otherwise sluggish economy. A logical cause of deficit spending.
Crowding Out The displacement of interest sensitive private investment that occurs when increased government spending drives up interest rates.
Cumulative Preferred Stock Preferred stock that is entitled to current and past dividends before dividends may be paid on common stock
Currency Appreciation A decrease in the number of units of a particular currency needed to purchase one unit of another currency.
Currency Depreciation An increase in the number of units of a particular currency needed to purchase one unit of another currency.
Currency Devaluation An increase in the official pegged price of foreign currency in terms of the domestic currency.
Currency Revaluation A reduction in the official pegged price of foreign currency in terms of the domestic currency.
Currency Transaction Reports (CTR) Bank reports required by the government of all transactions over $10,000.
Current Assets Cash or other assets that are expected to be converted to cash or sold or used up, usually within a year or less through the normal operations of a business.
Current Dollar Value The value of dollars that are actually paid or received at the time of a transaction.
Current Liabilities Liabilities that will be due in a short time, usually one year or less, and that are to be paid out of current assets.
Current Ratio An expression of a firm’s ability to pay its current debts from its current assets found by dividing current assets by current liabilities.
Current Yield A bond’s annual interest expressed as a percentage of the market or purchase price.
Currently Attainable Standards Standards that represent levels of operations that can be attained with reasonable effort.
Custodian Bank A bank that acts as a custodian for a clearing corporation.
Custody In charge of. To keep and care for under the direction of the true owner, without any interest therein adverse to the true owner.

(UCC definition)

Under Article 4 Bank Deposits and Collections, a customer is any person having an account with a bank or for whom a bank has agreed to collect items.
Customer Departmentalization Grouping activities on the basis of common customers.
Customer Financial Services A term used to describe the combined efforts (or teams) of the traditional credit and collections, customer service, accounts receivable, claims and adjustments, traffic management functions, and can include a variety of other tasks, (generally with the exception of the direct sales endeavor).
Cyclical Unemployment Unemployment that occurs because of declines in the economy’s aggregate output during recessions.

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