Business Lingo


Above-the-line: In Marketing, relating to marketing expenditure on advertising in media such as press, radio, television, cinema, and the World Wide Web, on which a commission is usually paid to an agency.

Absorbed Account: An account that has lost its separate identity by being combined with related accounts in the preparation of a financial statement.

Absorbed Business: A company that has been merged into another company.

Absorbed costs: The indirect costs associated with manufacturing, for example, insurance or property taxes.

Absorption costing: An accounting practice in which fixed and variable costs of production are absorbed by different cost centers.

Abusive tax shelter: A tax shelter that somebody claims illegally to avoid or minimize tax

Accelerated cost recovery system: A system used in computing the depreciation of some assets acquired before 1986 in a way that reduces taxes.

Accelerated depreciation: A system used for computing the depreciation of some assets in a way that assumes that they depreciate faster in the early years of their acquisition.

Access bond: A type of mortgage that permits borrowers to take out loans against extra capital paid into the account, home-loan interest rates being lower than interest rates on other forms of credit.

Account: A record of a business transaction. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged.

Accounting cost: the cost of maintaining and checking the business records of a person or organization and the preparation of forms and reports for financial purposes.

Accounting insolvency: A the condition that a company is in when its liabilities to its creditors exceeds its assets.

Account balance: The difference between the debit and the credit sides of an account.

Accountant: One who is skilled at keeping business records. Usually, a highly trained professional rather than one who keeps books. An accountant can set up the books needed for a business to operate and help the owner understand them.

Accounting period: A time interval at the end of which an analysis is made of the information contained in the bookkeeping records. Also the period of time covered by the profit and loss statement.

Accounts payable: Money which you owe to an individual or business for goods or services that have been received but not yet paid for.

Accounting rate of return: the ratio of profit before interest and taxation to the percentage of capital employed at the end of a period. Variations include using profit after interest and taxation, equity capital employed, and average capital for the period.

Accounts receivable: Money owed to your business for goods or services that have been delivered but not yet paid for.

Accounts receivable factoring: the buying of accounts receivable at a discount with the aim of making a profit from collecting them.

Accrual basis: A method of keeping accounts that shows expenses incurred and income earned for a given fiscal period, even though such expenses and income have not been actually paid or received in cash.

Actuary: A professional expert in pension and life insurance matters, particularly trained in mathematical, statistical, and accounting methods and procedures, and in insurance probabilities.

Administrative expense: Expenses chargeable to the managerial, general administrative and policy phases of a business in contrast to sales, manufacturing, or cost of goods expense.

Advertising: The practice of bringing to the public’s notice the good qualities of something in order to induce the public to buy or invest in it.

Agent: A person who is authorized to act for or represent another person in dealing with a third party.

Amortization: To liquidate on an installment basis; the process of gradually paying off a liability over a period of time.

Analysis: Breaking an idea or problem down into its parts; a thorough examination of the parts of anything.

Annual report: The yearly report made by a company at the close of the fiscal year, stating the company’s receipts and disbursements, assets and liabilities.

Appraisal: Evaluation of a specific piece of personal or real property. The value placed on the property evaluated.

Appreciation: The increase in the value of an asset in excess of its depreciable cost due to economic and other conditions, as distinguished from increases in value due to improvements or additions made to it.

Arrears: Amounts past due and unpaid.

Articles of Incorporation: A legal document filed with the state that sets forth the purposes and regulations for a corporation. Each state has different regulations.

Assets: Anything of worth that is owned. Accounts receivable are an asset.

Audiotaping: The act of recording onto an audiotape.

Audit: An examination of accounting documents and of supporting evidence for the purpose of reaching an informed opinion concerning their propriety.


Back-to-back loan: an arrangement in which two companies in different countries borrow offsetting amounts in each other’s currency and each repays it at a specified future date in its domestic currency. Such a loan, often between a company and its foreign subsidiary, eliminates the risk of loss from exchange rate fluctuations.

Back office: the administrative staff of a company who do not have face-to-face contact with the company’s customers.

Back pay: pay that is owed to an employee for work carried out before the current payment period and is either overdue or results from a backdated pay increase.

Backup: a period in which bond yields rise and prices fall, or a sudden reversal in a stock market trend.

Bad debts: Money owed to you that cannot be collected.

Balance: The amount of money remaining in an account.

Balanced budget: a budget in which planned expenditure on goods and services and debt income can be met by current income from taxation and other central government receipts.

Balanced investment strategy: a strategy of investing in a variety of types of companies and financial instruments to reduce the risk of loss through poor performance of any one type.

Balance of payments: a list of a country’s credit and debit transactions with international financial institutions and foreign countries in a specific period.

Balance of trade:the difference between a country’s exports and imports of goods and services.

Balance sheet: An itemized statement that lists the total assets and total liabilities of a given business to portray its net worth at a given moment in time.

Ballpark:an informal term for a rough, estimated figure. The term was derived from the approximate assessment of the number of spectators that might be made on the basis of a glance around at a sporting event.

Bank card: a plastic card issued by a bank and accepted by merchants in payment for transactions. The most common types are credit cards and debit cards, although smart cards have been introduced. Bank cards are governed by an internationally recognized set of rules for the authorization of their use and the clearing and settlement of transactions.

Banker’s draft: a bill of exchange payable on demand and drawn by one bank on another. Regarded as being equivalent to cash, the draft cannot be returned unpaid.

Bank guarantee: a commitment made by a bank to a foreign buyer that the bank will pay an exporter for goods shipped if the buyer defaults.

Bank statement: A monthly statement of account which a bank renders to each of its depositors.

Bankruptcy: the condition of being unable to pay debts, with liabilities greater than assets

Barren money: money that is unproductive because it is not invested.

Benchmarking: Rating your company’s products, services and practices against those of the front-runners in the industry.

Bill of entry: A statement of the nature and value of goods to be imported or exported, prepared by the shipper and presented to a customhouse.

Bill of lading: A statement of the nature and value of goods being transported, especially by ship, along with the conditions applying to their transportation. Drawn up by the carrier, this document serves as a contract between the owner of the goods and the carrier.

Bill of sale: Formal legal document that conveys title to or interest in specific property from the seller to the buyer.

Black market: an illegal market, usually for goods that are in short supply. Black market trading breaks government regulations or legislation and is particularly prevalent during times of shortage, such as rationing, or in industries that are very highly regulated, such as pharmaceuticals or armaments.

Board of directors: Those individuals selected to sit on an authoritative standing committee or governing body, taking responsibility for the management of an organization. Members of the board of directors are officially chosen by the shareholders, but in practice they are usually selected on the basis of the current board’s recommendations. The board usually includes major shareholders as well as directors of the company.

Board of Trustees: a committee or governing body that takes responsibility for managing, and holds in trust, funds, assets, or property belonging to others, for example, charitable or pension funds or assets.

Bookkeeping: The process of recording business transactions into the accounting records. The “books” are the documents in which the records of transactions are kept.

Bottom line: The figure that reflects company profitability on the income statement. The bottom line is the profit after all expenses and taxes have been paid.

Brand: A design, mark, symbol or other device that distinguishes one line or type of goods from those of a competitor.

Brand name: A term, symbol, design or combination thereof that identifies and differentiates a seller’s products or service.

Break-even: The point of business activity when total revenue equals total expenses. Above the break-even point, the business is making a profit. Below the break-even point, the business is incurring a loss.

Budget: An estimate of the income and expenditures for a future period of time, usually one year.

Business venture: Taking financial risks in a commercial enterprise.


Capital: Money available to invest or the total of accumulated assets available for production.

Capital account: the sum of a company’s capital at a particular time

Capital allowance: the tax advantage that a company is granted for money that it spends on fixed assets.

Capital appreciation: the increase in a company’s or individual’s wealth.

Capital asset: an asset that is difficult to sell quickly. for example, real estate.

Capital budget: a budget for the use of a company’s money.

Capital controls: regulations placed by a government on the amount of capital residents may hold.

Capital equipment:Equipment that you use to manufacture a product, provide a service or use to sell, store and deliver merchandise. Such equipment will not be sold in the normal course of business, but will be used and worn out or consumed in the course of business.

Capital gains (and losses): The financial gain made upon the disposal of an asset. The gain is the difference between the cost of its acquisition and net proceeds upon its sale.

Capital goods:stocks of physical or financial assets that are capable of generating income

Capital inflow: the amount of capital that flows into an economy from services rendered abroad.

Capitalism: an economic and social system in which individuals can maximize profits because they own the means of production.

Capitalist: an investor of capital in a business.

Capitalization: the amount of money invested in a company or the worth of the bonds and stocks of a company.

Cash: Money in hand or readily available

Cash discount: A deduction that is given for prompt payment of a bill.

Cash flow: The actual movement of cash within a business; the analysis of how much cash is needed and when that money is required by a business within a period of time.

Cash receipts: The money received by a business from customers.

Centralization: the gathering together, at a corporate headquarters, of specialist functions such as finance, personnel and information technology. Centralization is usually undertaken in order to effect economies of scale and to standardize operating procedures throughout the organization. Centralized management can become cumbersome and inefficient and may produce communication problems. Some organizations have shifted toward decentralization to try to avoid this.

Certificate: A document representing partial ownership of a company that states the number of shares that the document is worth and the names of the company and the owner of the shares.

Certified Public Accountant: An accountant to whom a state has given a certificate showing that he has met prescribed requirements designed to insure competence on the part of the public practitioner in accounting and that he is permitted to use the designation Certified Public Accountant, commonly abbreviated as CPA.

Chamber of Commerce: An organization of business people designed to advance the interests of its members. There are three levels: national, state and local.

Chief Executive: the person with overall responsibility for ensuring that the daily operations of an organization run efficiently and for carrying out strategic plans. The chief executive of an organization normally sits on the board of directors. In a limited company, the chief executive is usually known as a managing director.

Chief Executive Officer: the highest ranking executive officer within a company or corporation, who has responsibility for over-all management of its day-to-day affairs under the supervision of the board of directors. Abbr. CEO

Chief financial officer: the officer of the organization responsible for handling finds, signing checks, the keeping of financial records, and financial planning of the company.

Choice: A decision to purchase that is based on an evaluation of alternatives.

Clicks and brick: a business strategy that involves combining the traditional retail outlets with online commerce.

Close corporation: a public corporation in which all of the voting stock is held by a few shareholders, for example, management or family members. Although it is a public company, shares would not normally be available for trading because of a lack of liquidity.

Close-end credit: a loan, plus any interest and finance charges, that is to be repaid in full by a specified future date. Loans that have real estate or motor vehicles as collateral are usually closed-end

Collateral: property or goods used as security against a loan and forfeited to the lender if the borrower defaults.

Co-signers: Joint signers of a loan agreement who pledge to meet the obligations of a business in case of default.

Commercial paper: uncollateralized loans obtained by companies, usually on a short-term basis.

Commission: A percentage of the principal or of the income that an agent receives as compensation for services.

Contract: An agreement regarding mutual responsibilities between two or more parties

Controllable expenses: Those expenses that can be controlled or restrained by the business person.

Corporation: A voluntary organization of persons, either actual individuals or legal entities, legally bound together to form a business enterprise; an artificial legal entity created by government grant and treated by law as an individual entity.

Cost of goods sold: The direct cost to the business owner of those items which will be sold to customers.

Credit: Another word for debt. Credit is given to customers when they are allowed to make a purchase with the promise to pay later. A bank gives credit when it lends money.

Credit line: The maximum amount of credit or money a financial institution or trade firm will extend to a customer.

Current assets: Valuable resources or property owned by a company that will be turned into cash within one year or used up in the operations of the company within one year. Generally includes cash, accounts receivable, inventory and prepaid expenses.

Current liabilities: Amounts owned that will ordinarily be paid by a company within one year. Generally includes accounts payable, current portion of long-term debt, interest and dividends payable.


Debt: That which is owed. Debt refers to borrowed funds and is generally secured by collateral or a co-signer

Debt capital: The part of the investment capital that must be borrowed. Default: The failure to pay a debt or meet an obligation.

Deficit: The excess of liabilities over assets; a negative net worth.

Deficit financing: The borrowing of money because expenditures will exceed receipts.

Deficit spending: government spending financed by borrowing rather than taxation.

Deflation: a reduction in the general level of prices sustained over several months, usually accompanied by declining employment and output.

Depreciation: A decrease in value through age, wear or deterioration. Depreciation is a normal expense of doing business that must be taken into account. There are laws and regulations governing the manner and time periods that may be used for depreciation.

Desktop publishing: Commonly used term for computer-generated printed materials such as newsletters and brochures.

Devaluation: a reduction in the official fixed rate at which one currency exchanges for another under a fixed-rate regime, usually to correct a balance of payments deficit.

Development capital: finance for the expansion of an established company.

Differentiated marketing: Selecting and developing a number of offerings to meet the needs of a number of specific market segments.

Direct cost: Ma variable cost directly attributable to production. Items that are classed as direct cost include materials used, labor deployed, and marketing budget, and amounts spent will vary with output.

Direct mail: Marketing goods or services directly to the consumer through the mall. Direct mail is one tool that can be used as part of a marketing strategy. The use of direct mail is often administered by third-party companies that own databases containing not only names and addresses, but also social, economic, and lifestyle information. It is sometimes seen as an invasion of personal privacy, and there is some public resentment of this form of advertising. This is particularly true of e-mailed direct mail, known derogatively as SPAM.

Direct selling: The process whereby the producer sells to the user, ultimate consumer or retailer without intervening middlemen such as wholesalers, retailers, or brokers. Direct selling offers many advantages to the customer, including lower prices and shopping from home. Potential disadvantages include the lack of after-sales service, an inability to inspect products prior to purchase, lack of specialist advice, and difficulties in returning or exchanging goods.

Dirty price: the price of a debt instrument that includes the amount of accrued interest that has not yet been paid.

Discount: A deduction from the stated or list price of a product or service in relation to the standard price. A discount is a selling technique to encourage customers to buy and is offered for a variety of reasons: for buying in quantity or for repeat buying; as a special offer to move a slow-moving line or for paying by cash, etc.

Distribution channel: All of the individuals and organizations involved in the process of moving products from producer to consumer. The route a product follows as it moves from the original grower, producer or importer to the ultimate consumer.

Distributor: Middleman, wholesaler, agent or company distributing goods to dealers or companies.

Downsize: Term currently used to indicate employee reassignment, layoffs and restructuring in order to make a business more competitive, efficient, and/or cost-effective.


earnings: a sum of money gained from employment, usually quoted before tax, including extra reward such as fringe benefits, allowances, or incentives. In business, income or profit from a business, quoted gross or net of tax, which may be retained and distributed in part to the shareholders.

e-business: the conduct of business on the Internet, including the electronic purchasing and selling of goods and services, servicing customers, and communications with business partners.

e-commerce: the exchange of goods, information products, or services via an electronic medium such as the Internet.

Enterprise: A venture characterized by innovation, creativity, dynamism, and risk. An enterprise can consist of one project, or may refer to an entire organization.

Entrepreneur: An innovator of business enterprise who recognizes opportunities to introduce a new product, a new process or an improved organization, and who raises the necessary money, assembles the factors for production and organizes an operation to exploit the opportunity.

equal opportunities: the granting of equal rights. privileges, and status regardless of gender, age, race, religion, disability, or sexual orientation. Equality in employment is regulated by law in most Western countries.

equipment: Physical property of a more or less permanent nature ordinarily useful in carrying on operations, other than land, buildings or improvements to either of them. Examples are machinery, tools, tracks, cars, ships, furniture and furnishings.

equity: A financial investment in a business. An equity investment carries with it a share of ownership of the business, a stake in the profits and a say in how it is managed. Equity is calculated by subtracting the liabilities of the business from the assets of the business.

equity capital: Money furnished by owners of the business.

ergonomics: the study of workplace design and the physical and psychological impact it has on workers. Ergonomics is about the fit between people, their work activities, equipment, work systems, and environment to ensure that workplaces are safe, comfortable, efficient, and that productivity is not compromised.

Euro: the currency of 12 member nations of the European Union. The Euro was introduced in 1999, when the first 11 countries to adopt it joined together in an Economic and Monetary Union and fixed their currencies’ exchange rate to the Euro. Notes and coins were brought into general circulation in January 2002, although banks and other financial institutions had before that time carried out transactions in Euros.

exchange: The process by which two or more parties give something of value to one another to satisfy needs and wants

exchange controls: The regulations by which a country’s banking system controls its residents’ or resident companies’ dealings in foreign currencies and gold.

exchange rate: The rate at which one country’s currency can be exchanged for that of another.

excise duty: a tax on goods such as alcohol or tobacco produced and sold within a particular country.

expense account: amount of money that an employee or group of employees can draw on to reclaim personal expenses incurred in carrying out activities for an organization.

Expenses: personal costs incurred by an employee in carrying out activities for an organization that are reimbursed by the employer.

Export agent: an intermediary who acts on behalf of a company to open up or develop a market in a foreign country. Export agents are often paid a commission on all sales and may have exclusive rights in a particular geographic area.

Exporting: the process of selling goods to other countries.


Facsimile machine (FAX): Machine capable of transmitting written input via telephone lines.

Factor: a variable investigated in a statistical study.

Feasibility study: an investigation into a proposed plan or project to determine whether and how it can be successfully and profitably carried out.

Federal funds: an deposits held in reserve by the Federal Reserve System.

Feedback: the communication of responses and reactions to proposals and changes or to the findings of performance appraisals with the aim of enabling improvements to be made.

FIFO: FIRST IN FIRST OUT, a method of inventory control where the stock of a given product first placed in store is used before more recently produced or acquired goods or materials.

Finance: the money needed by an individual or company to pay for something, for example, a project or stocks.

Financial statements: Documents that show your financial situation.

Fiscal: relating to financial matters, especially in respect to government collection, use. and regulation of money through taxation.

Fixed asset:a long term asset of a business such as a machine or building that will not usually be traded.

Fixed expenses: Those costs which don’t vary from one period to the next. Generally, these expenses are not affected by the volume of business.

Float: The period between the presentation of a check as payment and the actual payment to the payee.

Floating rate: an interest rate that is not fixed and which changes according to fluctuations in the market

Floor: a lower limit on an interest rate, price, or the value of an asset.

Flow chart: a graphic representation of the stages in a process or system or the steps required to solve a problem.

Forecast: a prediction of the value of a variable in a statistical study

Forward pricing: the establishment of the price of a share in a mutual fund based on the next asset valuation.

Forward rate: an estimate of what an interest rate will be at a specified future time.

Franchise: an agreement enabling a third party to sell or provide products or services owned by a manufacturer or supplier. The franchise is regulated by a franchise contract, or franchise agreement, that specifies the terms and conditions of the franchise.

Franchise chain: a number of retail outlets operating the same franchise. A franchise chain may vary in size from a few to many thousands of outlets and in coverage from a small local area to worldwide.

Fraud: the use of dishonesty, deception. or false representation in order to gain a material advantage or to injure the interest of others.

Freebie: a product or service that is given away, often as a business promotion.

Free enterprise: the trade carried on in a free-market economy, where resources are allocated on the basis of supply and demand.

Free market: a market in which supply and demand are unregulated except by the country’s competition policy, and rights in physical and intellectual property are upheld.

Fulfillment: the process of responding to customer inquiries, orders, or sales promotion offers.

Future: a contract to deliver a commodity at a future date.

Futures market: a market for buying and selling securities, commodities, or currencies that tend to fluctuate in price over a period of time. The market’s aim is to reduce the risk of uncertainty about future prices.

Fundraising: Events staged to raise revenue.


gap analysis: a marketing technique used to identify gaps in market or product coverage. In gap analysis, consumer information or requirements are tabulated and matched to product categories in order to identify product or service opportunities or gaps in product planning.

gateway: E-Commerce: a point where two or more computer networks meet and can exchange data.

GDP: Gross domestic product, the total flow of services and goods produced by an economy over a quarter or a year, measured by the aggregate value of services and goods at market prices.

Globalization: the process of tailoring products or services to different local markets around the world.

GNP: Gross National Product, GDP plus domestic resident’s income from investment abroad less income earned in the domestic market accruing to noncitizens abroad.

Gross profit: The difference between the selling price and the cost of an item. Gross profit is calculated by subtracting cost of goods sold from net sales.

Growth capital: funding that allows a company to accelerate its growth. For new startup companies, growth capital is the second stage of funding after seed money.

Growth rate: the rate of an economy’s growth as measured by its technical progress, the growth of its labor, and the increase in its capital stock. .

Guarantee: A pledge by a third party to repay a loan in the event that the borrower defaults.

Guarantor: a person or organization that guarantees repayment of a loan if the borrower defaults or is unable to pay.

Guerilla marketing: A marketing technique, the aim of which is to damage the market share of competitors.


Hard sell: a heavily persuasive and highly pressured approach used to sell a product or service.

Hedge fund: a mutual fund that takes considerable risks, including heavy investment in unconventional instruments, in the hope of generating great profits.

High end: relating to the most expensive, most advanced, or most powerful in a range of things, for example, computers.

High-pressure: a selling technique in which the sales representative attempts to persuade a buyer very forcefully and persistently.

Holding company: a parent organization that owns and controls other companies./p>

Home page: The “table of contents” to a Web site, detailing what pages are on a particular site. The first page one sees when accessing a Web site.

Horizontal integration: The merging of functions or organizations that operate on a similar level. Horizontal integration involves the union of companies producing the same kinds of goods or operating at the same stage of the supply chain.

Hyperinflation: very rapid growth in the rate of inflation so that money loses value and physical goods replace currency as a medium of exchange.

IMF: International Monetary Fund, the organization that industrialized nations have established to reduce trade barriers and stabilize currencies, especially those of less industrialized nations.

Impaired capital: a company’s capital that is worth less than the par value of its stock.

Import: a product or service brought into another country from its country of origin either for sale or for use in manufacturing.

Incentive program: an award or reward scheme designed to improve sales force or retail performance.

Income redistribution: a government policy that seeks to restrain increases in wages or prices by regulating the permitted level of increase.

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.

Income tax: a tax levied directly on the income of a person or a company and paid to the local, state, or federal government.

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.

Indirect channel: the selling and distribution of products to customers through intermediaries such as wholesalers, distributors, agents, dealers, or retailers.

Indirect cost: a fixed or overhead cost that cannot be attributed directly to the production of a particular item and is incurred even when there is no output.

Inflation: a sustained increase in a country’s general level of prices that devalues its currency, often caused by excess demand in the economy.

Infomercial: a television or cinema commercial that includes helpful information about a product as well as advertising content.

Initial public offering: the first instance of making particular shares available for sale to the public.

Insolvency: the inability to pay debts when they become due. Insolvency will apply even if total assets exceed total liabilities, if those assets cannot be readily converted into cash to meet debts as they mature. Even then, insolvency may not necessarily mean business failure. Bankruptcy may be avoided through debt rescheduling or turnaround management.

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.

Insurance: an arrangement in which individuals or companies pay another company to guarantee them compensation if they suffer loss resulting from risks such as fire, theft, or accidental damage.

Intellectual property: the ownership of rights to ideas, designs, and inventions, including copyrights, patents, and trademarks. Intellectual property is protected by law in most countries, and the World Intellectual Property Organization is responsible for harmonizing the law across different countries and promoting protection of intellectual property rights

Interest: the rate that a lender charges for the use of money that is a loan.

Interest rate: the amount of interest charged for borrowing a particular sum of money over a specified period of time.

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.

Internet: The vast collection in inter-connected networks that provide electronic mail and access to the World Wide Web.

Inventory: A list of assets being held for sale, The stock of finished goods, raw materials, and work in progress held by a company.

Invest: To lay out money for any purpose from which a profit is expected.

Investment: The spending money on stocks, shares, and other securities, or on assets such as plant and machinery.

Invisible exports: the profits, dividends, interest, and royalties received from selling a country’s services abroad.

Invoice: a document that a supplier sends to a customer detailing the cost of products or services supplied and requesting payment.


joint account: an account, for example, one held at a bank or by a broker, that two or more people own in common and have access to.

joint ownership: ownership by more than one party, each with equal rights in the item owned. Joint ownership is often applied to property or other assets.

junk bond: a bond with high return and high risk.

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