The Business Terms Vocabulary Review
This document contains business statements
regarding the terms studied in the program. They refer to
practices that an organization may or may not use. The purpose is to
mark the statement "YES" when you agree with the statement and
"NO" when it is incorrect.
Be sure to answer ALL items. [Any answer not marked will be scored
as incorrect]
YES NO
1. A & P Mix explains
the various types of marketing activities used to meet a goal.
2. Absenteeism deals with
the frequency of employees failing to show up for work.
3. Accounts
Payable is a future liability owed to others for goods or services
purchased on an open account.
4. Accounts
Receivable Financing is a long-term financing technique for working
capital purposes.
5. Accrued Income is
income earned during a fiscal period but not paid by the end of the
period.
6. Acquisition Financing
is a loan to a bank to assist in acquiring the assets of a
business.
7. Ad Valorem is a fixed
tax, duty, or fee on the value of goods or services on which it is
levied.
8. Adverse Action is
unfavorable action that can be taken by a lender and always results in
loan termination.
9. Agency is when someone
or a firm functions on behalf of another company.
10. Amortization are
payments on a debt covering interest and principle.
11. An annual report is
prepared by a corporation at the end of a fiscal year. An annual report
highlights the year's events, summarizes operations, and includes
audited financial information.
12. Software developed for
use by end users, such as word processing, spreadsheets, and database
programs
are called operating systems.
13. A rbitration
is often conducted by a third part as a process of reaching a settlement in a controversy
14. Asset-Based
Lending is a business loan where the borrower pledges collateral for a loan.
Asset-based lending is called commercial finance. Funds are used to
build inventories, cover seasonal expenses, take advantage of trade
discounts, meet payrolls, and solve other cash flow problems.
Asset-based loans are secured. Most lenders concentrate on loans of
$250,000 and higher
15. Available Balances are
demand deposit balances in a commercial bank which can be withdrawn by
the depositor.
16. Balance of Trade = A
nation's exports minus its imports
17. Bank Draft is a check drawn
by one bank against funds deposited to its account in another bank
authorizing the second bank to make payment to the individual named in
the draft
18. Base Pay Rate is the employee's
overtime wage used to compute overtime and other incentives
19. Bearish = pessimistic
person
20. Benefit Ratio =
Comparison of benefit costs to salary and wages
21. Bill of Lading is a receipt
from a carrier, reciting that the carrier has received specified
property for delivery to stated destination
22. Blanket Lien is a means a
security interest which purports to cover very specific collateral owned by the debtor
23. Blue Collar is usually
considered to be skilled,
semi-skilled, and unskilled workers that wear uniforms
24. Bona Fide =: In good faith or genuine
25. Bond Ratings are ratings assigned to bonds by a rating service. 'AAA' is the
highest rating and 'R' is the lowest
26. Bracket Creep means an individual is edging into higher income brackets as he or
she struggles to keep up with inflation
27. Break Even Analysis is a method used to determine the point at which a
business will either make a profit or incur a loss. This technique
focuses on the relationship among fixed cost, variable cost, and profit.
Break-even analysis should never be included in a business plan or loan
proposal
28. Budget is a financial operating plan of revenues and expenses for control
purposes and specific time period
29. Business
that opens its books on January 1 and closes them December 31, is said
to be operating on a calendar year
30. Return on Capital
Employed (ROCE) = Financial return of Capital used in a business
31. Capitalization = total
value of capital stock, paid-in capital in excess of par value, and
borrowed capital. Capitalization includes outstanding securities
(capital stock) and long-term bonds.
32. Cash Flow Analysis is a
historical financial report, often done on a monthly basis, which
shows the movement of cash within a business. Cash flow analysis
offers managers (and lenders) a tool to evaluate the ability to meet
obligations and to pay dividends, rather than merely focusing on net
income
33. Channel Conflict is disagreement between producer, wholesaler, or retailer in a distribution
channel.
34. Chattel is a security
agreement covering machinery or livestock.
35. Clear Title is a title that
is free of any clouds and is considered marketable
36. Collateral is security in the form of assets, either real or personal property, which
a company pledges to a lender. The lender may repose and sell the
collateral to retire the obligation. Lenders often call collateral their
primary source of repayment
37. Commodities are basic assets
such as agricultural products, precious metals, and financial
instruments, bought and sold as contracts in a market
38. Competitive Analysis
concerns itself with analysis of features,
strengths, weaknesses, and performance of company's product lines.
39. Contingency Fee = payment for professional services based on a
percentage of a potential
reward
40. An Individual with
intimate knowledge of a company's financial situation is referred to as a
corporate Insider:
41. Cost of Capital = Rate
of return that a company could earn if it chose an alternative
investment with the same degree of risk. Or the discount rate that
should be used in the capital budgeting process
42. Covenants are binding
contract between two parties. When borrowing, covenants (dos and don'ts)
are spelled out in the loan agreement
43. Daily Trading Limit is a dollar range that
commodities or options are allowed to rise or fall in one day.
44. Decision Tree is a visual aid summarizing
the specific steps in the decision-making process.
45. Deficiency Letter = Letter from the Securities and
Exchange Commission that notes deficiencies in the registration
statement. A company can respond to this letter for the record.
46. Demographics are socioeconomic factors (or
population statistics) such as age, income, sex, education, occupation,
or even family size that composes the population of a market niche.
47. Direct Expense = direct cost attributable to a
particular expenditure.
48. Division
of Labor means breaking tasks down into operations, so that employees
specialize in one area of activity.
49. Doublespeak is intentionally vague and confusing
wording that in fact provides very little information. Some of you
think this is what Mike Jay does<G>.
50. Earnest Money is a deposit a buyer pays to a seller
to show good faith and intention to do the deal at a specific price.
51. Emerging Market = In marketing is a newly identified
group having a number of characteristics in common.
52. Equity is the future value of an asset once all liens
and encumbrances are deducted. Also called ownership interest.
53. Fair market value is the
price, in cash or equivalent, that a buyer could be expected to pay, and
a seller could be expected to accept, if the asset were exposed for sale
on the open market for a reasonable period of time, both buyer and
seller being knowledgeable of the facts, and neither being under any
compulsion to act.
54. File 13 = Waste basket
55. Floorplan Financing = Financing provided a
business to acquire inventory with the loan being retired as the items
are sold. Automobile dealers use this liability-based financing technique.
56. Four C's is an expression of the criteria for
approving loans - Character/Credit, Capital, Capacity, Collateral.
57. General Ledger = Accounting book of final entry
where financial transactions are summarized in one transaction account.
58. Golden Handcuffs are the use of financial incentives,
such as stock options, to retain key employees.
59. Gross Profit is the total income less the cost of
merchandise sold and the expense of doing business
60. Holding Company is a corporation that controls other
companies through stock ownership.
61.
Interstate Commerce
= buving and selling
of goods and services within a state.
62. Jobber is the retailer of goods.
63. Last In First Out = Method of selling inventory
in which the items acquired last are sold first.
64. Loss Leader is merchandise sold at a substantial
discount in order to lure customers into the store and make additional
purchases.
65. Marketable
Securities are expected to be converted into cash,
within a year.
66. Nepotism is the hiring or
showing favoritism to family members or friends.
67. No Load Fund is mutual
fund purchased with no sales charge directly from the firm that manages
it, rather than from a broker
68. Oligopoly is a market
dominated by a large number of sellers
69. Ordinary Income is income
from normal business operations, not income derived from the sale of
capital assets
70. Receivables Turnover
are number of times average accounts receivable is collected in a year
71. Return on Investment is
the most widely used single measure of a firm's operating efficiency. ROI
equals the ratio of net income to invested capital
72. Safety
Stock is the minimum inventory capable of meeting expected max demand--overcoming
variations in leadtime
73. Service
Mark is a design, device, or trade mark used to establish the identity of a
service offered.
74. Span
of Control is related to management theory limiting the number of subordinates a
manager supervises to improve effectiveness
75. Straight
Line Depreciation is a method of calculating depreciation of an asset that
assumes the asset will lose value in an equal dollar amount per year
76. SWOT
Analysis is a strategic planning technique, analyzing a company's strengths,
weaknesses, opportunities, and threats
77 . Theory
X management is indicative of a participative and coaching style of
interaction.
78.
Transfer Payment is a payment made to individuals by the government
79. Undifferentiated
Marketing occurs when a company markets its product to the widest possible
market
80. Unsecured Debt is a
loan
that is made on the basis of the borrower's signature alone and does not
contain a pledge of collateral
81. Velocity is the number of
times a dollar is spent over a specific time period. Velocity focuses on
the turnover of money
82. Work Breakdown
Structure (WBS) is a high-level task list used in project management
83. Zero Balance Account:
Accounts maintained at a bank wherein there are no balances on deposit.
Rather, debits are accumulated against the account for a given period of
time and then a company's master account is charged for the amount of
the debit balances and the ZBA account is credited, thereby bringing the
balances up to a zero balance. This procedure provides cash control
without the need for many bank accounts
