Facilitating Functions Financing, risk bearing, obtaining market information, and standardizing and grading.
Factor An agent for the sale of merchandise who may hold possession of the goods in its own name or in the name of its principal. It is authorized to sell and to receive payment for the goods.
Factor’s Lien A factor’s right to keep goods consigned to him if he may reimburse himself for advances previously made to the consignor.
Factoring 1. The process of selling receivables to a firm that is in the business of buying receivables at discount and collecting them, rather than waiting until their average due date to get the funds;
2. May be referred to as asset-based lending, and is generally a non-bank source of funding. The factor will generally possess a lien on accounts receivable, inventory, and possibly other assets. Factoring may be the only alternative for some borrowers if they are unable to negotiate conventional bank financing.
Factoring Company A firm that buys a business’s open-book accounts and customarily absorbs all losses if the debtors do not pay.
Factors of Production The resources used to provide goods and services: land, labor, capital, and entrepreneurship.
Factory Overhead Costs All the costs of operating the factory except for direct materials and direct labor.
Fair Labor Standards Act A 1938 federal law that requires employers to pay a minimum hourly wage and overtime pay of one-and-one half times the base rate for any hours worked in excess of 40 per week.
Farm Products Crops or livestock or supplies used or produced in farming operations.
FAS Named Port (Free Alongside Ship) When the exporter is responsible for the merchandise and all shipping costs to the vessel at the named port, where the importer takes over; these costs are reflected in the exporter’s price.
Feasibility Study A user-oriented overview of the proposed system’s purpose and potentiality.
Featherbedding In labor relations, a demand for the payment of wages for a service not actually rendered.
Federal Anti-Injunction Act (Norris-Laguardia Act of 1932) A federal law that prohibits courts from issuing injunctions against labor’s nonviolent protest activities; requires an open hearing before the issuance of an injunction; outlaws “yellow dog” contracts.
Federal Deposit Insurance Corporation (FDIC) A public corporation with a three fold purpose: to build confidence in the nation’s banking system, ensure depositor’s account balances, and promote sound bank management.
Federal Funds Market A market for day-to-day lending and borrowing of reserves among financial institutions.
Federal Funds Rate The interest rate prevailing in the federal funds market.
Federal Reserve Act of 1913 A law that created the Federal Reserve System, commonly called the Fed, and made it responsible for managing the nation’s supply of money and credit.
Federal Reserve System The central bank and monetary authority of the United States, known as the Fed.
Federal Trade Commission (FTC) A government agency established by the Federal Trade Commission Act of 1914; a quasi-judicial body empowered to issue cease-and-desist orders against companies whose combinations would significantly lessen competition.
Fee Simple Absolute ownership of real property.
Fee Simple Estate The total interest a person may have in land.
Fellow Servant Doctrine Precludes an injured employee from recovering damages from his employer when the injury resulted from the negligent act of another employee.
Felony All criminal offenses that are punishable by death or imprisonment in a penitentiary.
Fence Individuals or businesses that purchase bust out products.
FICA Tax Federal Insurance Contributions Act tax. Used to finance federal programs for old-age and disability benefits (social security) and health insurance for the aged (Medicare).
Fidelity Bond An insurance policy that reimburses an employer for financial loss resulting from employee dishonesty.
Fiduciary In general, a person is a fiduciary, when he occupies a position of trust or confidence in relation to another person or his property. Trustees, guardians, and executors, occupy fiduciary positions.
Field A group of characters that have a pre-defined meaning.
Field Warehousing Merchandise is stored on the premises of the business concern (the borrower) while the bank secures its loan with a warehouse receipt. It is segregated from other merchandise, and physically controlled by independent warehousing employees. When the firm needs merchandise, it must pay the bank for what it needs.
File Server A computer that operates as a server for obtaining data through a network.
Filing Claims 1. To preserve a creditor’s rights and to receive its share of payment, it is often necessary to file a formal claim in a manner and within the proper time prescribed by law. Filing is generally required in bankruptcy matters, probate proceedings, assignments, receiverships, and estates of minors and incompetents;
2. A method used to perfect a security interest accomplished by recording in the proper public office.
Filtering The deliberate manipulation of information to make it appear more favorable to the receiver.
Finance Charges (Consumer Credit) The total of all costs a consumer must pay to obtain credit; may be called interest, service or carrying charges. see “late payment charges”
Financial Accounting The branch of accounting that is concerned with the recording of transactions using Generally Accepted Accounting Principles (GAAP) for a business or other economic unit with a periodic preparation of various statements from such records.
Financial Accounting Standards Board (FASB) A group created in 1973 through the joint efforts of the American Institute of Certified Public Accountants and several other accounting organizations to be the overall rule-making body for the accounting profession.
Financial Analysis The use of mathematics to bring important facts and relationships on accounting statements into sharp focus.
Financial EDI (FEDI) The exchange of the electronic business information such as lock box information reports, daily balance reports, and monthly accounts analysis reports between a firm and its bank. In the context of payments, financial EDI refers to electronic data interchange combined with payment instructions. This allows customers to include invoice data and payment instructions in the same payment order.
Financial Intermediaries Institutions that serve as go-betweens, excepting funds from savers and lending those funds to borrows.
Financial Leverage Use of debt to increase the expected return on equity, measured by the ratio of assets to equity.
Financial Markets Banks and other institutions that facilitate the flow of funds from savers to borrowers.
Financial Statement Types 1. Audit (see “adverse, disclaimer, qualified, unqualified opinions”);
2 . Review;
3. Compilation;
4. Management prepared.
Financial Statements The balance sheet, income statement, statement of changes in financial position, statement of changes in owners’ equity accounts, and notes thereto.
Financing Agency 1. A bank, finance company, or person who in the ordinary course of business, makes advances against goods or documents of title;
2. One who, by arrangement with either the seller or buyer, intervenes in ordinary course to make or collect payment due, or claimed under the contract for sale. This is done by purchasing or paying the sellers draft or making advances against it or by merely taking it for collection, whether or not documents of title accompany the draft.
Financing Statement A form prescribed by a debtor’s state to be completed and filed by a creditor in order to perfect a security interest (lien) in certain types of collateral. The purpose is to give notice of a financing arrangement in which a security interest in personal property is granted by the debtor to the secured (lender) party.
Financing Statement (Form UCC-1) A form stipulated by Article 9 of the Uniform Commercial Code executed between a debtor and a secured party that, if filed and perfected properly with the appropriate state and local entities, creates a collateralized security interest in the assets stipulated on the UCC-1 form for the secured party.
Fine A sum of money collected by a court from a person guilty of some criminal offense.
Finished Goods Inventory The cost of finished products on hand that have not been sold.
Firm Offer An offer by a merchant to buy or sell goods signed in writing that, by its terms, gives assurance it will be held open.
Firms Economic units, formed by profit-seeking entrepreneurs, that hire resources to produce goods and services for sale.
First Meeting of Creditors The initial meeting creditors have with the debtor of a financially distressed firm. The debtor will have current financial statements and be prepared to give the entire financial history of the business as well as the reasons for its distressed condition.
First-In, First-Out Method (FIFO) A method of inventory costing based on the assumption that the cost of merchandise should be charged against revenue in the order in which the costs were incurred.
First-Line Management The lowest level of management; their subordinates are non-management workers.
Fiscal Policy The use of government purchases, taxes, and borrowing to influence aggregate economic activity.
Fiscal Year The twelve-month period that a company adopts for financial accounting purposes.
Fixed Assets Property, plant and equipment that facilitates production and are not subject to the purchase and sale in the normal course of business.
Fixed Budget A budget that assumes a fixed level of sales or production.
Fixed Cost Cost that remain constant regardless of the number of units produced.
Fixed Exchange Rates Rates pegged within a narrow range of values by central bank’s ongoing purchases and sales of currencies.
Fixed Production Cost Production expense that does not vary with volume.
Fixed-Interval Reordering System A system that uses time as the determining factor for reviewing and reordering inventory items.
Fixed-Point Reordering System A system that “flags” the fact that inventory needs to be replenished when it reaches a certain level.
Fixture A chattel which has been affixed to real estate and may or may not be severable therefrom without injury to the property.
Flexible Exchange Rates Rates determined by the forces of supply and demand without government intervention.
Flextime Refers to variations in starting and quitting times, but assumes that a number of hours (usually eight) is worked each day.
Float The delay from the time a check is deposited and the time when funds are available to be spent.
Floating-Rate Note A type of loan in which the interest rate is reset either daily, weekly, monthly, quarterly, or semi-annually.
Floor Planning The common name used for trust receipt loans made to automobile dealerships.
Flow Chart A diagram using four (4) standardized symbols to represent flows of data between processes and sub-processes in a business.
FOB Carrier Named Port (Free On Board) When the exporter is responsible for the merchandise and all shipping costs, to the named port; this includes loading on board the vessel and all forwarder’s fees. All included in the exporter’s price, this applies to vessel, ground, or air shipments.
FOB Destination Terms of agreement between buyer and seller whereby ownership passes when merchandise is received by the buyer, and the seller pays the transportation cost.
FOB Shipping Point Terms of agreement between buyer and seller whereby ownership passes when merchandise is delivered to the freight carrier, and the buyer pays the transportation cost.
Focus Strategy The strategy a company follows when it pursues a cost or differentiation advantage in a narrow industry segment.
Forbearance Giving up the right to enforce what one honestly believes to be a valid claim, in return for a promise. It is sufficient consideration to make a promise binding.
Forecasting See “qualitative forecasting, quantitative forecasting, revenue forecasting, technological forecasting”
Forecasts Predictions of future outcomes.
Foreclosure The legal act by which the owner of a mortgage cuts off the rights or interest of the mortgagor in the mortgaged property.
Foreign Aid An international transfer made on especially favorable terms for the purpose of promoting economic development.
Foreign Corporation The term applied to a U.S. corporation in states other than the one in which it is incorporated.
Foreign Exchange The currency of another country needed to carry out international transactions.
Foreign Trade Intermediary A wholesaler or agent who performs marketing functions for firms that wish to do business in other countries.
Foreign-Operated Sales Branch A firm’s wholly owned sales organization in a foreign country.
Forfeiture Money or property taken as compensation for injury or damage to the person or property of another.
Forgery False writing or alteration of an instrument with the fraudulent intent of deceiving or injuring another.
Formatted Data The numerical and/or alphabetical data arranged in pre-specified formats in which the meaning of each data item is defined in advance.
Forward Chaining In an expert system, starting with data and trying to draw all possible conclusions from the data.
Forward Purchasing A policy of purchasing relatively large quantities to fill needs over longer periods of time.
Four Month Period (Bankruptcy) The involuntary petition must be filed within four (4) months after the act of bankruptcy has been committed.
Franchise 1. A license sold by one firm to another, allowing it to produce or sell a product or service under specific terms or conditions;
2. A right inferred or granted by a legislative body. It is a contract right and cannot be revoked without cause.
Franchise Tax A tax on the right of a corporation to do business under its corporate name.
Fraud An intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. A principal may be incompetent or negligent in managing the business or may be even willfully wasteful of the firm’s assets, by gambling for instance, but unless creditors were at some point intentionally deceived on a material fact, the principal cannot properly be charged with fraud.
The elements of a fraud are:
1. Intentionally false representation of fact;
2. Intent that the deceived person act thereon;
3. Knowledge that such statements would naturally deceive;
4. That the deceived acted to his injury.
Fraudulent Conveyance
(Transfer)
A transfer of property by a debtor, for the intent and purpose of defrauding his creditors. Such property may be reached by the creditors through appropriate legal proceedings.
Free and Clear Indicates that the title to land or other property being transferred is not encumbered (liened).
Free Astray A transportation term for a freight shipment which has gone astray. If it is the carrier’s fault and it is located, it is the obligation of the carrier to make delivery to the original destination at no additional costs to the shipper or consignee.
Freehold An estate in fee or for life. A freeholder is usually a person who has a property right in the title to real estate amounting to an estate of inheritance.
Freight Forwarder A business that receives goods for transportation. Services include consolidation of small freight shipments of less than a carload and truckload or container lots assembled for delivery at lower shipping rates.
Front Man An individual, usually with a clean credit history, set up to be the head of a business, when others, behind the scenes, are really in control.
Front-End CASE (Computer Aided Software Engineering) Tools used by users, managers, and information system professionals to describe business processes and the data needed by those processes.
Full Employment The level of employment when there is no cyclical unemployment.
Full-Line Forcing An arrangement in which a manufacturer refuses to supply any portion of the product line unless the retailer agrees to accept the entire line.
Fully Registered Bond One without coupons; the company pays interest automatically to the owner whose name is on record with the firm, and the principal is paid to that person when the bond matures.
Functional Departmentalization Grouping activities by function performed.
Functional Specification An overview of the business problem addressed by a proposed system, the way work practices will change, and the project’s benefits, costs, and risks.
Functional Structure A design that groups similar or related occupational specialties together.
Functional-Level Strategy Seeks to determine how to support the business-level strategy.
Fundamental Attribution Error The tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments.
Funds Generally, working capital or current assets – current liabilities. Sometimes used to refer to cash or to cash and marketable securities.
Funds Statement A statement accounting for the increases and decreases in a company’s net working capital throughout an accounting period.
Fungible Goods Are those goods of which any unit is from its nature of mercantile usage, treated as the equivalent of any other unit.
Future Goods Goods that are not both existing and identified.
Futures Contracts for the sales and delivery of commodities in the future, made with the intention that no commodity be delivered or received immediately.

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