Illegal Contrary to public policy and the fundamental principles of law. Illegal conduct includes not only violations of criminal statutes but also the creation of agreements that are prohibited by statute in the common law.
Illusory That which has a false appearance. If that which appears to be a promise is not a promise, it is said to be illusory.
Immediate Confirmation Indicates that people learn best if reinforcement is given as soon as possible after training.
Immunity Freedom from the legal duties and penalties imposed by others.
Implementation Conveying a decision to those affected and getting their commitment to it.
Implementation Lag The time needed to introduce the change in monetary, fiscal or operational policy.
Implicit Cost A firm’s opportunity cost of using its own resources or those provided by its owners without a corresponding cash payment.
Implied The finding of a legal right or duty by inference from facts or circumstances.
Implied Warranty A guarantee not expressly stated but leading to a conclusion that goods purchased are reasonably fit for the general purposes for which they are sold.
Implied-in-Fact Contract A legally enforceable agreement inferred from the circumstances and conduct of the parties.
Import Credit Letter A commercial letter of credit issued to finance the importation of goods.
Import Duty A tax imposed on imported goods to raise their market prices, making the cost of competing domestic products attractive by comparison.
Import Substitution A development strategy that emphasizes manufacturing products that are currently imported.
Importing Buying goods and services abroad.
Imputed Negligence Negligence that is not directly attributed to the person himself but is the negligence of the person who is in privity with him and with whose fault he is chargeable.
In Personam A legal proceeding, the judgment of which binds the defeated party to a personal liability.
In Rem A legal proceeding, the judgment of which binds, affects, or determines the status of property.
Incentives Rewards designed to encourage and reimburse employees for efforts beyond normal performance expectations.
Inchoate Not yet completed or finished. Used in reference to rights which have not become absolute.
Incidental Beneficiary If the performance of a promise would indirectly benefit a person not a party to a contract, such person is an incidental beneficiary.
Income Effect A fall in the price of a good increases consumers’ real income, making them more able to purchase all normal goods, so the quantity demand increases.
Income Elasticity of Demand The percentage change in quantity demanded (holding the price constant) divided by the percentage change in income.
Income from Operations The excess of gross profit over total operating expenses.
Income Statement An accounting statement that summarizes the company’s revenues, cost of goods sold, expenses, net profit or loss over a period of time.
Income Statement A summary of the revenues and expenses of a business entity for a specific period of time.
Income Statement Components See “Classification of Accounts” Appendix 1 of Glossary
Income Summary Account The account used in the closing process for transferring the revenue and expense account balances to the owner’s equity account at the end of the period.
Incorporation The process of creating a state chartered corporate legal entity.
Increasing Opportunity Cost As more of a particular good is produced, larger and larger quantities of an alternative good must be sacrificed if the economy’s resources are already being used fully and efficiently.
Incremental Budget A budget that allocates funds to departments according to allocations in the previous period.
Incumbrance (Encumbrance) A burden on either the title to land or thing or upon the land or thing itself.
Indemnity Compensation paid for damage or loss sustained or anticipated.
Indenture A deed executed by both parties, as distinguished by a deed poll that is executed only by the grantor.
Independent Contractor The following elements are essential to establish the relation of independent contractor, in contradistinction to principal and agent. An independent contractor must exercise his independent judgment on the means used to accomplish the result; be free from control or orders from any other person; be responsible only under his contract for the result obtained.
Independent Variable A variable that affects, but is not affected by, the values of some other variables.
Index Number A quantitative device that condenses or summarizes a body of data with several characteristics into a single numerical expression.
Indictment A finding by a grand jury that it has reason to believe the accused is guilty as charged.
Indifference Curve A curve showing all combinations of two goods that provide a consumer the same level of total utility.
Indirect Business Taxes Federal, state and local business taxes that are partially or entirely shifted to other tax payers; taxes on sales and on property are examples.
Indirect Costs 1. Costs that cannot be traced directly to a cost object;
2. Costs that are largely unaffected by changes in output.
Indirect Method A method of reporting the cash flows from operating activities. Calculated by adjusting the net income from operations for all deferrals of past cash receipts and payments, and all accruals of expected future cash receipts and payments.
Individual Retirement Account (IRA) Allows an employee to set aside funds in a special account which are tax-deferred until the employee retires.
Indorsement (Endorsement) Writing one’s name upon paper for the purpose of transferring the title.
Industrial Organization A branch of economics that examines the relationship between the structure of a market and the conduct and performance of firms in that market.
Industrial Products Goods or services purchased for the production of other goods and services or to be used in the operation of the business.
Industrial Unions Associations of workers employed within a given industry, such as steel or automobile manufacturing, regardless of skill.
Inelastic Demand The type of demand that exists when a change in price has relatively little effect on quantity demanded; demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price.
Infant Industries Protection Argument The argument that endorses placing protective tariffs and quotas on certain imports so that fledging domestic industries can become well established.
Inferior Good A good for which demand decreases as consumer income rises.
Inflation A period when prices in general are rising and the purchasing power is declining.
Inflation Rate The annual percentage change in the price level.
Informal Organization A network of personal and social relationships that arises spontaneously as people associate with each other in the work environment.
Information Useful data whose form and content are relevant and appropriate for a particular use.
Information Architecture The summary view of what data will be collected, where and how data will be collected, transmitted, and stored, and how data will be used.
Information Center Facility and dedicated staff within an information systems department whose goal is to make end-user computing effective.
Information Economy An economy in which much of what people produce is related to information rather than physical goods.
Information Overload Overabundance of data, some of which may be unsolicited or irrelevant.
Information Products Products deriving most of their value from the information they contain.
Information System (IS) 1. A system that provides management with needed information on a regular basis;
2. Combination of work practices, information, people, and information technologies organized to accomplish goals in an organization.
Information Technology (IT) A system that provides management with needed information on a regular basis.
Infringement Infringement of a patent on a product is the manufacturing of a product that produces the same result by the same means and operation as the patented product.
Inherit To take or receive property or title by succession or will.
Initial Public Offering (IPO) A company’s first sale of stock to the public.
Injunction A writ of judicial process issued by a court of equity, by which a party is required to do a particular thing or to refrain from doing a particular thing.
Inland Transit Insurance Insurance that covers losses covered by catastrophes and acts of God for overland transportation.
Innovation The process of turning an invention into a marketable product.
Inside Information Relevant information about a company which has not yet been made public. It is illegal for holders of this information to make trades based on it.
Insider An individual with intimate knowledge of the operations and financial condition of a business.
Insolvency The condition of a person who is unable to pay his debts as they fall due. The general term is to be distinguished from a person who is bankrupt and whose liabilities exceed assets.
Insolvent Refers to a person who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due. Within the meaning of the Bankruptcy Code, it is based on a balance sheet test . If a debtor’s assets are less than the debtor’s liabilities, they are deemed insolvent.
Installment Contract One which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause “each delivery is a separate contract or its equivalent.”
Installment Method The method of recognizing revenue, whereby each receipt of cash from installment sales is considered to be a part of the cost of merchandise sold and part gross profit.
Instrument A negotiable instrument or security or any other writing that evidences a right to the payment of money and is not itself a security agreement or lease and is of a type that is an ordinary course of business transferred by delivery with any necessary endorsement or assignment. E.g., agency notes, commercial paper, T-Bills, certificates of deposit (CD’s), banker’s exceptances and repurchase agreements.
Insufficient Funds A term used on checks when a depositor’s balance does not have enough money in the bank for checks to be paid.
Insurable Interest A person has an insurable interest in a person or property if he will be directly and financially affected by the death of a person or the loss of the property.
Insurance By an insurance contract, one party, for an agreed premium, binds himself to another, called the insured, to pay the insured a sum of money conditioned upon the loss of life or property of the insured.
Insurance Policy A legal contract that transfers risk from one party (the insured) to another (the insurer) for a fee called a premium.
Intangible Assets Long-lived assets that are useful in the operation of a business, that are not held for sale, and are without physical quality.
Intangible Benefits The benefits that affect a firm’s performance but are difficult to measure.
Intangible Property Something which represents value but has no intrinsic value of its own, such as a note or bond.
Integrated Systems Several systems whose internal operations are closely linked.
Integrated Work Team A group that accomplishes many tasks by making specific assignments to members and rotating jobs among members as the tasks require.
Intelligence The collection of information, scanning of the environment, and detection of problems that need to be solved.
Intelligent Building A building containing capabilities for electronic monitoring and environmental control.
Intent A state of mind that exists prior to, or contemporaneous with, an act.
Interest The payment resource owners receive for the use of their capital.
Interest Coverage Earnings before interest and taxes divided by interest expense.
Interest Rate The amount of money paid for the use of a dollar for one year.
Interest Rate Cap A financial contract which limits the rise in a selected interest rate.
Interest Rate Floor A financial contract which limits the decline in a selected interest rate.
Interfaced Systems Several systems at least one of which uses information from other systems.
Interlocking Directorate An arrangement whereby one individual serves on the board of directors of a competing firm.
Interlocutory Decree A decree of a court of equity that does not settle the complete issue but settles only some intervening part, awaiting a final decree.
Intermediary Bank Under Article 4 Bank Deposits and Collections, it is any bank, except the depository or payor bank, to which an item is transferred in course of collection.
Intermediate Goods Goods purchased for further processing and resale.
Internal Analysis An analysis of the strengths and weaknesses of the company. Includes an analysis of the company’s manufacturing, marketing, technological, financial and human resources.
Internal Control Framework Consists of five major elements: the control environment, risk assessment, control procedures, monitoring and information and communication.
Internal Rate of Return (IRR) 1. The interest rate one would have to receive on a project’s cost stream to produce the same ultimate return as the project;
2. A method of analysis of proposed capital investments that focuses on using present value concepts to compute the rate of return from the net cash flows expected from the investment.
Internal Specification The technical blueprint for a system, developed during internal system design.
Internal System Design The process of deciding how the system will be configured on the computer.
International Accounting Standards Committee (IASC) The primary body leading the effort in developing uniform international accounting standards.
International Monetary Fund Provides a vehicle for foreign exchange by assisting and stabilizing exchange rates in the world economic community.
Interpleader A procedure whereby a person who has an obligation, but does not know which of two or more claimants are entitled to performance, can bring a suit that requires the consenting parties to litigate between themselves.
Interrogatory A written question from one party to another in a lawsuit, a type of discovery procedure.
Interstate Commerce Any economic or financial activities, including the sale and transportation of goods or services that cross state boundaries.
Interview 1. Nondirective uses general questions, from which other questions are developed;
2. Stress used to create pressure and stress on an applicant;
3. Structured conducted using a set of standardized questions that are asked to all job applicants.
Intestate 1. The laws of descent or distribution of the estate of a deceased person;
2. A person who dies without a will.
Intrapreneurship Creating the entrepreneurial spirit in a large organization.
Inventory Goods that a person holds for sale or lease. Goods to be furnished or which have been furnished under contracts of service, or goods that are raw materials, work in process, or materials used or consumed in a business.
Inventory Days Number of days of inventory on hand. It is inventory turnover ratio divided into the number of days in the period.
Inventory Shrinkage Loss of inventory due to shoplifting, employee theft, or errors in recording or counting inventory.
Inventory Turnover A calculation of the number of times a firm sold and replaced (or turned over) its average stock of goods during an accounting period. Found by dividing the cost of goods sold by the average inventory.
Invested Capital The money long-term investors have put into the business. It is equal to long-term liabilities plus owners’ equity.
Investment Use of money to make more money, to gain income or increase capital, or both.
Investment Banking Firm A firm that purchases an entire issue of new securities from the issuing company as a wholesaler and resells it to the general public.
Investment Center A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the plant assets available to the center.
Investment Credit Is extended to businesses, and governmental units, and to others to supply basic capital investment needs such as for land, buildings, machinery, and fixtures.
Invoice The bill provided by the seller, (who refers to it as a sales invoice), to a buyer, (who refers to it as a purchase invoice), for items purchased.
Involuntary Bankruptcy If a debtor has 12 or more creditors, an involuntary petition against him may be filed by three (3) or more creditors who have claims totaling at least $10,000. If the debtor has fewer than 12 creditors, one creditor with a claim of $10,000 or more may file the petition. Involuntary petitions may be initiated under Chapter 7 or 11.
Irreparable Damage Irreparable does not mean injury beyond the possibility of repair, but it does mean that it is so constant and frequent in occurrence that no fair or reasonable redress can be had in a court of law.
Irrevocable Letter of Credit A letter of credit that may not be amended or canceled without the consent of all involved parties.
ISDN Integrated Service Digital Network, a set of standards whose adoption provides additional telephone capabilities without scrapping existing telephone lines. ISDN offers a consistent way to handle voice and computer data in telephone networks.
Issue Under Article 3 Commercial Paper, issue means the first delivery of an instrument to a holder or a remitter.
Issuer 1. A bailee who issues a document; but in relation to an unaccepted delivery order, the issuer is the person who orders the possessor of goods to deliver;
2. A bank or other person issuing a letter of credit.
Item Under Article 4 Bank Deposits and Collections, item means an instrument for the payment of money, even though it is not negotiable, but does not include money.
Iteration Computer language instructions to perform an action repeatedly until a stopping condition occurs.

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