Accounting- is the process recording all the
transactions of the company which affect any
investment of capital, so that at any time the results
of the investments may be known.
Acid-Test Ratio- an index of short term paying
ability
Amortization- is any method of repaying a debt, the
principal and interest included by a series of equal
payments at equal interval of time.
Amortized Loan- a loan that is discharged or repaid
by a uniform series of payments extending over its
duration.
Annuity- is a series of equal payments occurring at
equal period of time.
Annuity Due- is one where the payments are made at
the start of its period, beginning from the first period
Appraiser- the person engaged in the task of
valuation
Assets- anything on value that is owned by an
enterprise
Authorized Capital- grand total of the assets and
operational capability of the corporation
Benefit Cost Ratio- it is the ratio of the difference
between the benefits and the disbenefits to the cost
associated with the particular project
Bid bulletin- additional information of perspective
bidders on contract documents issued prior to the
bidding date
Bilateral Monopoly- a market situation where there
is one seller and one buyer
Bilateral Oligopoly- a market situation where there
are few sellers and few buyers
Bond- it is the certificate of indebtedness of a
corporation usually for a period and less than 10
years and GUARANTEED by mortgage on certain
assets of a corporation of subsidiaries.
Bookkeeping- is the systematic recording of all
business transactions
Book Value- it is worth the property which is listed
on the book of accounts of an enterprise. It IS
ORIGINAL COST MINUS THE TOTAL
DEPRECIATION.
Borrowed Funds or Capital- are those capital
supplied by others on which fixed interest must be
paid and debt must be repaid at a specific time
Break Even Point- it is the point in economic studies
whreby there is no profit.
Callable Bond- a bond that contains clauses
permitting repayment before maturity
Capacity or Plant Factor- it is the ratio between the
average load and the total available capacity
Capital Gain- an increase in the value of a capital
asset
Capital loss- the reduction in the money value of a
capital asset
Capitalized Cost- is the sum of the first cost and the
present worth of all costs of replacement, operation
and maintenance for a long time or forever
Cash Flow diagram- it is the graphical
representation of cash flows which are drawn in time
scale
Certificate of Deposit- a negotiable claim issued by
a bank of lieu of term deposit
Chairman of the board- highest position in the
corporation
Collateral Bond- a type of bond whose security is
the stocks or bonds of a well-established subsidiary
of the corporation.
Commodity- any particular raw material or primary
product
Common Stock- it represents ordinary ownership
without special guarantees of return
Construction Cost- it is the sum of all cost necessary
to prepare a construction project for operation
Corporation- an aggregation of individuals formed
for the purpose of conducting a business and
recognized by law as fictitious person
Coupon- a document that shows proof of legal
ownership of a financial security
Coupon Bond- a type of bond having a coupon
attached to the bond for each interest payment that
will come due during life of the bond
Currency Depreciation- it denotes the fall i the
exchange rate of one currency in terms of others. The
term usually applies to floating exchange rates
Currency Devaluation- the deliberate lowering of
the price of the nation's currency in terms of the
accepted standard
Current Assets- this consist of cash and account
receivable during the next period or any other
material which will be sold.
Current Liabilities- represents claim against owners
which must be paid in the near future
Debenture Bond- a bond without any security
behind it except a promise to pay on a certain date by
issuing corporation.
Declining Balance Method- a method of computing
depreciation in which the annual charge is a fixed
percentage of the depreciated book value at the
beginning of the year to which the depreciation
applies.
Deferred Annuity- it is a series of equal payments
occurring at equal interval of time where the first
payment is made after several periods, after the
beginning of the period.
Deflation- reduction in the level of national income
and output usually accompanied by the fall in the
general price level.
Demand- it is the quantity of certain commodity that
is brought at a certain price at a given place and time.
Demand Factor- it is the ratio between the
maximum power demand and the sum of the
connected loads of the system
Demented Persons- parties whose consent or
signature in a contract is not considered intelligent.
Depletion- it is the decrease in the worth or value of
the property due to the gradual extraction of its
contents
Depletion Cost- annual charge that is made for the
maintenance of investment in wasting assets such as
gas wells, oils, mines
Depreciation- it is the decrease in value of the
physical property due to the passage of time
Depreciation Cost- annual charge that is made
during the period of the useful life for the services
rendered by the investment i the building, machinery
and equipment in producing the products.
Depreciation Recovery- the present worth of all the
depreciation over the economic life of the item
Development Cost- it is the sum of all cost incurred
by an investor of a project up to the time that the
project is accepted by those who will promote it
Differential Cost- it is the ratio of a small increment
of cost and a small increment of output.
Direct labor- it is the actual work applied directly in
the process of manufacturing a certain product
Direct Materials- these are the materials which are
included in the financial product itself
Discount- it is the difference between the present
worth and the future worth of a negotiable paper.
Diversity Factor- is the ration between the sum of
the maximum demands of the separate parts of the
system and the maximum demand of the entire
system
Dividends- profit earned by a corporation, which is
periodically distributed to the stockholders
Duopsony- a market situation where there are only
two buyers with many sellers.
Economics- it is the study of the wealth, its value,
creation and distribution
Economic Life- the length of time which the
property may be operated at a profit
Economic Return- the profit derived from a project
or business enterprise without consideration of
obligations to financial contributions or claims of
other based on profit.
Effective Interest- the true value of interest rate
computed by equations for compound interest for a
one-year period
Effective Rate of Interest- it is the actual rate of
interest on the principal for one year.
Elastic Demand- it occurs when a decrease in selling
price will cause a greater than proportionate increase
in the volume of sales
Engineering Economy- it is the analysis and
evaluation of the factors that will affect the economic
success of engineering projects to the end that a
recommendation can be made which will ensure the
best use of capital
Equipment Obligations Bond- a type of bond
whose guaranty is in lien on railroads equipments
Equity- is the claims of anyone against the assets of
the enterprise
Escalatory Clause- the provision in the contract that
indicates the possible adjustments of material cost
and labor cost.
Exact Simple Interest- an interest based on the
number of days, 365 for an ordinary year and 366
days fora leap year
Face or Par Value- it is the amount stated in the
bond
Fair Value- it is the value which is disinterested third
party, different from buyer or seller, will determine in
order to establish a price that is fair and acceptable to
both the buyer and the seller.
Fixed Assets- these assets which will not be
converted into cash and account receivable during the
next period or any other material which will be sold.
Fixed Liabilities- these are the liabilities which are
not due for payment until sometime more than one
year distant
Forced Saving- a saving which takes place because
goods are not available for consumption rather than
the consumer really want to save.
Franchise Value- is an intangible item of value
arising from the exclusive right of a company to
provide a specific product
Going Value- an intangible value which is actually
operating concern has due to its operation.
Goodwill Value- is that element of value business
has earned through the favorable consideration and
patronage of its customers arising from its well-
known and well conducted policies and operation
Gratuitous- kind of obligation which has no
condition attached
Group Depreciation Method- is a method consists
of the computation of a single annual depreciation
charge for a group of similar assets using their
average life
Gross Margin- gross profit, sales less costs of goods
sold as percentage of sales
Hard Currency- a currency traded in a foreign
exchange market for which the demand is
consistently high in relation to its supply
Increment Cost- it refers to any increase in cost
Inelastic Demand- it occurs when a decrease in a
selling price will cause a less than proportionate
increase in sales
Interest- the amount of money paid for the use of
money called a capital for a certain period of time
Interest Rate- the ratio of the interest payment to the
principal for a given unit of time and usually
expressed as percentage of the principal.
Joint Bond- a type of bond issued jointly by two or
more corporations.
Law of Supply and Demand- when free competition
exists, the price of a product will be that value where
the supply is equal to the demand
Law of Diminishing Return- When one of the
factors of production is fixed in quantity or is
difficult to increase, increasing other factors of
production will result in a less proportionate increase
in output.
Liabilities- are debts or the claim other than the
owners upon the assets
Load Factor- is the ratio between the average
demand and the maximum demand
Luxury- Capacity of commodity to satisfy human
wants
Luxuries- these are the products of services that are
desired by human and will be purchased if money is
available after the required necessities have been
obtained
Marginal Cost- the additional cost of producing one
more unit
Marginal Revenue- that amount received from the
sale of an additional unit of a product
Marginal Utility- it is the ability of the last unit of
the last commodity which is consumed or acquired
Market- the place where the buyers and sellers come
together
Market Value- is the price a willing buyer will pay
for a willing seller of the stock
Maximum Value- it is the maximum load that
occurs in a certain interval of time within a given
period
Monopoly- exists when a unique product is available
from one seller and where new sellers are prevented
from selling the same or similar products
Monopsony- A market whereby there is only one
buyer of an item which there are no good substitute
Mortgage Bond- this is the most common type of
Bond.
Necessities- these are the products or services that
are required to support human life.
Nominal Rate of Interest- rate of interest which is
specified to a certain number of periods per year
Obsolescence- this refers to changes in conditions
externals to the equipment under consideration
Ordinary Annuity- the first payment is made at the
end of the period
Ordinary Simple Interest- is an interest which is
computed on the basis of the banker's year which is
equal to 360 days
Ownership- is the equity of person who normally
possesses an assets
Partnership- it is the association of two or more
persons for the purpose of engaging a business for
profit
Patent- exclusive right granted by the government
Perfect Competition- it occurs when a certain
product is offered for sale by many vendors or
suppliers and there is no restriction

Perpetuity- is a series of equal payments which the

payments continue indefinitely

Physical Inventory- Actual Counting or

determination of the actual quantity of the materials
on hand as of given date

Power Factor- is the ratio of the output of the power

in watts and the product of volts and amperes

Preferred Stock- represent ownership

Prepaid Expenses- these are the assets in the form of

money paid for certain materials not yet delivered or
services not rendered to the company

Prepaid Income- this arises when business receives

payment for a service before it actually renders
service

Present Worth Factor- mathematical equation also

known as the present value of an annuity of one

Prime Cost- the sum of the direct labor costs and the
direct material cost

Private- type of ownership in business where

individuals exercise and enjoys the right in their
interest

Proprietorship- is the simplest form of business

organization wherein the business is own entirely by
one person

Rate-Base Value- is the value assigned to the

property for the purpose of establishing rates

Rate of Interest- the amount earned by one unit of

principal during a unit of time

Rate of Return- is the measure of the financial

efficiency of the investment

Registered Bond- the owner's name is recorded in

the books of corporation

Risks- the deviation of actual outcomes

Salvage Value- the amount that can be obtained from

the sale after its useful life

Supply- is the quantity of certain commodity

Tort- an evil wrong commitment

Utility- is the capacity of commodity to satisfy

human want

Variable cost- cost that vary with the output

Working capital- also known as circulating capital