Glossary of Business Terms – “A”



AAA (Abbr) – Authentication, authorization and accounting, the software verification procedures that acknowledge or validate an e-commerce user or message. (E-commerce)

Abandonment Option – (Finance, Banking and Accounting)  the option of terminating an investment before the time that it is scheduled to end.

Abandonment Value – (Finance, Banking and Accounting) The value that an investment has if it is terminated at a particular time before it is scheduled to end.

Abilene Paradox –  GENERAL MANAGEMENT a theory stating that some decisions that seem to be based on consensus are in fact based on misconception and lead to courses of action that defeat original intentions.

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.

Abstract Of Title – A summary relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

Abusive Tax Shelter – A tax shelter that somebody claims illegally to avoid or minimize tax

Acceleration Clause – A condition in a real estate financing instrument giving the lender the power to declare all sums owed the lender immediately due and payable upon the happening of an event, such as the sale of the property, or a delinquency in the repayment of the note.

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.

Account Balance = The difference between the debit and the credit sides of an account.

Accountability –  The allocation or acceptance of responsibility for actions.

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 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 Cycle – The regular process of formally updating a firm’s financial position by recording, analyzing and reporting its transactions during the accounting period.

Accounting Equation – A Formula in which a firm’s assets must be equal to the sum of its liabilities and the owner’s equity.

Accounting Insolvency – The condition that a company is in when its liabilities to its creditors exceed its assets.

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.

Accounts Receivable Financing – a form of borrowing in which a company uses money that it is owed as collateral for a loan it needs for business operations.

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.

Added Value – MARKETING an increase in the attractiveness to customers of a product or a service achieved by adding something to it.

Adjusted Book Value –  The value of a company in terms of the current market values of its assets and liabilities.

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.

Affiliate -A company that is controlled  by another or is a member of a group, or either of two companies that owns a minority of the voting stock of the other.

After-Sales-Service –  Customer support following the purchase of a product or service

Agency-  A relationship between two people or organizations in which one is empowered to act on behalf of the other in dealings with a third party.

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.

Angel Investor – An individual or group of individuals willing to invest in an unproven but well-researched e-business idea.

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.

Annuity – A contract which a person pays a lump-sum premium to an insurance company and in return receives periodic payments, usually yearly, often beginning on retirement.

Antitrust – Relating to legislative initiatives aimed at protecting trade and commerce from monopolistic business practices that restrict or eliminate competition.

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

Appreciatio – 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.

Assignment – The receipt of an exercise notice by an options writer that requires him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified price.

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.

Authentication – ( E-COMMERCE)a software security verification procedure to acknowledge or validate an e-commerce message’s source, uniqueness, and integrity to make sure data is not being tampered with

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