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Commerce Dictionary

Commerce Dictionary

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Accounting, Business Studies and Economics Dictionary
A priori
- Literally, "at a prior time" or "in advance"; that which is prior to actualexperience.
Abacus -
1. instrument of ancient origin used to perform arithmetic calculations bysliding counters along rods or in grooves.
 
Or)
 
2. semi-annual accounting research journal(founded in 1965) published by the Sydney University Press, edited by the University of Sydney, Department of Accounting. The subject matter covers all areas of accountingincluding international accounting.
Abandonment
- Voluntary surrender of property, owned or leased, without naming asuccessor as owner or tenant. The property will generally revert to a person holding a prior interest or, in cases where no owner is apparent, to the state. 
Abatement
- Complete or partial cancellation of a levy imposed by a governmentalunit. Abatements usually apply to tax levies, special assessments, and service charges.
Ability- to-pay principle
- The idea that taxes should be levied on a person according tohow well that person can shoulder the burden.
Above full-employment equilibrium
- A situation in which macroeconomic equilibriumoccurs at a level of real GDP above long-run aggregate supply.
ABC method
- Inventory management method that categorizes items in terms of importance. Thus, more emphasis is placed on higher dollar value items ("A"s) than onlesser dollar value items ("B"s), while the least important items ("C"s) receive the leasttime and attention. Inventory should be analyzed frequently when using the ABC method.The procedure for ABC analysis follows: (1) Separate finished goods into types (chairs of different models, and so on); separate raw materials into types (screws, nuts, and so on).(2) Calculate the annual dollar usage for each type of inventory (multiply the unit cost bythe expected future annual usage). (3) Rank each inventory type from highest to lowest, based on annual dollar usage. (4) Classify the inventory as A-the top 20%; B-the next30%; and C-the last 50% of dollars usage, respectively. (5) Tag the inventory with itsappropriate ABC classification and record those classifications in the item inventorymaster records.
Abnormal returns -
The difference between the actual return and that is expected i.e‘normal return’.
Abnormal spoilage -
Spoilage that is recognized as a loss when discovered. Normalspoilage is inherent in the manufacturing process and is unavoidable in the short run.Abnormal spoilage is spoilage beyond the normal spoilage rate. It is controllable because
 
it is a result of inefficiency. It is not a cost of good production, but rather it is a loss for the period. Costs are assigned to the spoiled units and then credited to work-in-progressinventory and debited to a Joss account.
Above the line
- This term can be applied to many aspects of accounting. It meanstransactions, assets etc., that are associated with the everyday running of a business. See below the line.
Absolute advantage
- The situation that exists when a given amount of resources can produce more of some product in one country than in another. 
Absolute poverty
- When only a subsistence level is attained. When only the minimumlevels of food, clothing and shelter can be met. 
Absorb -
1. To incorporate or assimilate amounts in an account in a way in which thefirst firm or entity loses its identity and is "absorbed" within the second firm or entity.Examples include the sequential transfer 
of 
expenditure account amounts to work-in- progress, finished goods, and cost of sales.
OR 
2. To distribute
or 
spread costs by the process
of 
appropriation
or 
allocation
Absorption costing
- Method in which the costs of manufacturing, variable and fixed,are treated as product costs, the non-manufacturing costs (i.e, administrative and sellingexpenses) are classified as period costs. Absorption costing
 for 
inventory valuation isrequired
 for 
external reporting.
A comparison between absorption and direct costing follows:
 Absorption Costing1. Required
 for 
outside reporting 2.Includes fixed overhead as an inventoriablecost3. Stresses gross profit4. Has a higher net income when production exceeds sales Variable Costing1. Not accepted
 for 
outside reporting 2. Doesnot include fixed overhead as aninventoriable cost3. Stresses contribution margin4. Has a higher net income when sales exceed production 
Absorption variance -
The variance from budgeted absorption costing of manufactured product and the actual cost of the manufactured product.
ACAS
– A body which mediates where conflict exists in business.
 
Accelerated depreciation
- Method recognising high, amounts of depreciation in theearlier years and lower amounts in the later years of a fixed asset's life.
Acceleration hypothesis
- The hypothesis that when national income is held above potential, the persistent inflationary gap will cause inflation to accelerate, and whennational income is held below potential, the persistent recessionary gap will causeinflation to decelerate.
Accelerationist theory
- The theory that unemployment can only be reduced below thenatural level at the cost of accelerating inflation.
Accelerator
- The level of investment depends upon the
rate of growth of demand.
Agiven percentage change in demand may require a larger percentage change ininvestment. The accelerator shows by how much the rate of growth of investmentexceeds the rate of growth of demand (and of output).
Accelerator theory
- The
level 
of investment depends the
rate of change
of nationalincome, and a result tends to be subject to be substantial fluctuations.
Account
- A section in a ledger devoted to a single aspect of a business (eg. a Bank account, Wages account, Office expenses account).
Accounts
- The financial records of a business' transactions.
Account aging -
is used to refer to tracking past due accounts in accounts receivable(debtors) or accounts payable (creditors) using the dates the charges were first recorded.
Accountant
- One who performs accounting services. Accountants prepare financialstatements and tax returns, audit financial records, and develop financial plans. Theywork in private accounting (e.g., for a corporation), public accounting (e.g., for a CPAfirm), not-for-profit accounting (e.g., for a governmental agency). Accountants oftenspecialise in a particular area such as taxes, cost accounting, auditing, and managementadvisory services. A book keeper is distinguished from an accountant as one whoemploys lesser professional skills. The bookkeeping function is primarily one of recording transactions in the journal and posting to the ledger.
Accounting -
1. Umbrella term encompassing the multitude of disciplines includingauditing, taxation, financial statement analysis, and managerial accounting. Accounting-related functions include financial accounting, cost accounting, not-for-profit accounting,and financial planning. Or 2. Process of recording, measuring, interpreting, andcommunicating financial data. The accountant prepares financial statements to reflectfinancial condition and operating performance. Also, the accounting practitioner renders personal accounting services to clients such as preparing personal financial statementsand tax planning.

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