Helpful terms

We’ve put together a list of terms we find helpful together with accompanying links to help you as you go through your business improvement process.
Accounts (114)

allocate definition or meaning

An allocation is where two or more accounting transactions are allocated against each other. This may be perhaps a payment to a supplier or a reconciliation of an account

Category: Accounts

balance forward definition or meaning

Previous balance on an account which is carried forward over to the next billing period.

Category: Accounts

batch definition or meaning

A quantity or consignment of goods produced at one time or to arrange things in sets or groups.

Category: Accounts

definition or meaning of best and final offer

Term used in bids to indicate that no further negotiation on the amount or terms is possible. BAFO is issued often in response to the request a customer sends to the contractors or suppliers whose bids are within a close range of one another.

Category: Accounts

definition or meaning of billback

A cost recovery system in which the client or payer is charged a percentage of the total cost of equipment, services and venues of which they have already used.

Category: Accounts

definition or meaning of burden rate

The indirect costs that are associated with either employees or the inventory of the company.

Category: Accounts

cash discount definition or meaning

An incentive in the form of a percentage or fixed amount discount offered by a seller to a buyer for paying an invoice ahead of the scheduled due date.

Category: Accounts

explain what a commitment report is

You can report the total costs of a project by reporting the committed costs along with the actual costs. Committed costs are the outstanding requisitions and purchase orders charged to a project , which are not yet invoiced.

Category: Accounts

control account definition or meaning

A account used to record the balances of a number of subsidiary accounts and to provide a cross – check on them.

Category: Accounts

controllable spending definition or meaning

Costs over which the company has full authority

Category: Accounts

cost object definition or meaning

A project or department for which costs are accumulated or measured.

Category: Accounts

explain cost performance index

A measure of the financial effectiveness and efficiency of a project. It divides the budgeted cost of work completed ,or earned value , by the actual cost of the work performed.

Category: Accounts

cost plus definition or meaning

A method of establishing a selling price in which an agreed percentage is added to the cost price to cover profit.

Category: Accounts

explain credit memorandum

Document issued by the seller of goods or services to the buyer, reducing the amount that the buyer owes to the seller under the terms of an earlier invoice.

Category: Accounts

explain credit memos from the bank

A note a financial institution sends a client, informing the customer about an incremental change in account balances. Generally good news.

Category: Accounts

explain cross price elasticity

The responsiveness of demand for good X following a change in the price of a related good Y.

Category: Accounts

explain declining balance depreciation

A method in which a constant rate of depreciation is applied to an assets declining book value each year.

Category: Accounts

definition or meaning of balance depreciation formula

Declining balance method =( Net Book Value-Residual Value)*Rate of Depreciation(in *)

Category: Accounts

definition or meaning of balance method

An accelerated depreciation method that records large depreciation expenses during the earlier years of an asset’s useful life, and smaller ones in later years.

Category: Accounts

definition or meaning of agi

Artificial general intelligence. The intelligence of a machine that could successfully perform any intellectual task that a human being can.

Category: Accounts

definition or meaning of arrears

Money that is owed and should have been paid earlier.

Category: Accounts

definition or meaning of blanket

A blanket purchase order is a contractual arrangement between a buyer and a supplier, for the supplier to deliver goods and services to the buyer, at a pre- set price, for a period of time.

Category: Accounts

definition or meaning of commitment

Earmarking or setting aside of funds in response to a purchase requisition.

Category: Accounts

definition or meaning of conversion factor

The manufacturing cost of a product relative to the cost of raw materials.

Category: Accounts

definition or meaning of demand schedule

Tabulation of the quantity of a good that all consumers in a market will purchase at a given price.

Category: Accounts

definition or meaning of direct deposit

A deposit of money by a payer directly into a payee’s bank account.

Category: Accounts

definition or meaning of dunning

The process of methodically communicating with customers to ensure the collection of accounts receivable. Communications progress from gentle reminders to more demanding and firmer collection options.

Category: Accounts

definition or meaning of flex

A flex budget itemizes different expense levels depending upon changes in the amount of actual revenue.

Category: Accounts

An individual article or unit.

Category: Accounts

definition or meaning of rebate

Return of a portion of a purchase price by a seller to a buyer after the payment of the full invoice amount.

Category: Accounts

definition or meaning of retainer

A fee paid in advance to someone to secure their services for use when required.

Category: Accounts

definition or meaning of retention

Payment for a service or product that is withheld pending the completion of some specified condition.

Category: Accounts

definition or meaning of withholding tax

An amount that an employer withholds from employee’s wages and pays directly to the government.

Category: Accounts

depreciation expense formula definition or meaning

The annual depreciation expense equals the cost of the asset minus the salvage value, divided by the useful life (number of years).

Category: Accounts

double declining balance definition or meaning

A form of accelerated depreciation.

Category: Accounts

what is a double declining balance calculator

Calculate double declining balance depreciation rate and expense amount for an asset for a given year based on it’s acquisition cost, salvage value and expected useful life.

Category: Accounts

expain double declining balance depreciation

Expenses are recorded in the same period as the revenue that is earned as a result of those expenses. So when a company purchases an expensive asset that will be used for many years, it does not deduct the entire purchase price as a business expense in the year of purchase but instead deducts the price over several years.

Category: Accounts

explain double declining balance formula

Divide 100% by the number of years in the asset’s useful life, this is your straight -line depreciation rate. then multiply that number by 2 and that is your Double Declining Depreciation rate.

Category: Accounts

explain dunning notices

A collection letter sent to defaulting debtor demanding payment by the creditor.

Category: Accounts

earned revenue definition or meaning

Revenue a company derives from it’s operations.

Category: Accounts

explain eremit

A online secure global money transfer service for business.

Category: Accounts

what is estimate at completion

The forecasted cost of a project as the project progresses.

Category: Accounts

exponential smoothing calculator definition or meaning

Exponential Smoothing is used to forecast the business volume for taking appropriate decisions. This is a way of ‘Smoothing’ out the data by eliminating much of random effects.

Category: Accounts

finance charge definition or meaning

Any fee representing the cost of credit, or the cost of borrowing.

Category: Accounts

who are first sun finance

First sun finance is a loan company will several branches across the US.

Category: Accounts

fiscal period definition or meaning

Accounting period of a particular duration.

Category: Accounts

explain forecast error

The difference between the actual or real value of a product and the predicted or forecast value.

Category: Accounts

definition or meaning of functional currency

The main currency used by a business or unit of business. The currency of the primary economic environment in which the company operates.

Category: Accounts

explain geo tax

Tax authorities have jurisdiction over sales tax in a specific area. The address’s geographic area determines the tax jurisdiction and as a result the tax to be paid and the authority it is payable to.

Category: Accounts

what is a gl code

A number used to record business transactions in the general ledger

Category: Accounts

what is a gln number

Global Location Number can be used by companies to identify their locations, giving them complete flexibility to identify any type or level of location required

Category: Accounts

definition or meaning of grade range

A grading scheme is a set of criteria that measures varying levels of achievement in a course. Account-level grading schemes are grading schemes that can be defined at the account or sub-account level for the entire institution.

Category: Accounts

definition or meaning of half year convention

A way to calculate depreciation for tax purposes. A fixed asset is assumed to have been in service for one-half of it’s first year,irrespective of the actual purchase date. The remaining half year of depreciation is deducted from earnings in the final year of depreciation.

Category: Accounts

explain how to calculate accumulated depreciation

The depreciation expense charged during the current period is added to the accumulated depreciation at the beginning of the period while deducting the depreciation expense for a disposed asset.

Category: Accounts

explain how to calculate mean absolute deviation

To find the mean absolute deviation of the data, start by finding the mean of the data set. Find the sum of the data values, and divide the sum by the number of the data values. Find the absolute value of the difference between each data value and the mean. Find the sum of the absolute values of the difference.

Category: Accounts

explain how to cancel a check

The bank should be directed to put a stop payment on the check.

Category: Accounts

explain income summary

An account that receives all the temporary accounts of a business upon closing them at the end of every accounting period.

Category: Accounts

intrastat definition or meaning

The system for collecting information and producing statistics on the trade in goods between countries of the European Union.

Category: Accounts

explain inventory cost

All costs associated with holding or storing inventory for sale.

Category: Accounts

explain inventory write off

The formal recognition of a company’s inventory that no longer has value.

Category: Accounts

job level definition or meaning

Job levels are catagories of authority in an organization. Each level is typically associated with a sale ray range and a series of job titles.

Category: Accounts

definition or meaning of landed cost

The total price of a product or shipment once it has arrived at a buyer’s doorstep.

Category: Accounts

explain ledger definition

The principal book or computer file for recording and totaling

Category: Accounts

definition or meaning of macrs table

The Modified Accelerated Cost Recovery System (MACRS) is the current tax depreciation system in the US. The capital cost of tangible property is recovered over a specified life by annual deductions for depreciation .

Category: Accounts

definition or meaning of the mad formula

Mean Absolute Deviation is the average of the absolute value, or the difference between actual values and their average value, and is used for the calculation of demand variability.

Category: Accounts

definition or meaning of ncmr

Non Cleared Margin Requirement.

Category: Accounts

order processing definition or meaning

The workflow associated with the picking, packing and delivery of the packed items to a shipping carrier.

Category: Accounts

explain outbound meaning

Outbound cash flow is any money a company or individual must pay out when conducting a transaction with another party.

Category: Accounts

payed definition or meaning

To settle (a debt, obligation,etc.), as by transferring money or goods. To give over (a certain amount of money) in exchange for something.

Category: Accounts

explain payment advice

A document sent by a customer to the supplier of a product or a service informing the supplier of the payment of their invoice or bill.

Category: Accounts

post dated definition or meaning

A check written by the drawer for a date in the future.

Category: Accounts

explain prenote direct deposit

A test transaction that gets sent to the bank to make sure that the provided employee account information is valid before setting up a direct deposit transfer to pay the employee.

Category: Accounts

what is prorated salary

The proportion or percentage a part-time employee would receive if he worked full-time.

Category: Accounts

recurring definition or meaning

A type of business transaction that is repeated frequently, often at fixed intervals. For example monthly rent.

Category: Accounts

rent roll definition or meaning

The total income arising from rented property.

Category: Accounts

replenish definition or meaning

Inventory replenishment is an operation that consists in making the stock full again in order to avoid stock -out.

Category: Accounts

safety stock definition or meaning

An additional quantity of an item held in inventory in order to reduce the risk that the item will be out of stock.

Category: Accounts

definition or meaning of shift pattern

The various types of work schedules

Category: Accounts

subcategory definition or meaning

A smaller category within a larger group.

Category: Accounts

subtype definition or meaning

A secondary or subordinate type

Category: Accounts

explain the sum of the years digits

An accelerated method for calculating an asset’s depreciation.

Category: Accounts

explain the sum of the years digits formula

The remaining useful life of the asset is divided on a particular date by the sum of the year’s digits.

Category: Accounts

explain the sum of years digits depreciation

The method used to accelerate the recognition of depreciation. Most of the depreciation is recognized in the first few years of iuse

Category: Accounts

what is a suspense account

An account in the books of an organization in which items are entered temporarily before allocation to the correct or final account.

Category: Accounts

definition or meaning of the contribution margin ratio

The difference between a company’s sales and variable expenses, expressed as a percentage.

Category: Accounts

unrealized definition or meaning

A transaction that has occurred but has not been consummated by a payment.

Category: Accounts

utilization formula definition or meaning

The proportion of the available time ( expressed usually as a percentage ) that a piece of equipment or a system is operating. Formula : Operating hours x 100 / available hours.

Category: Accounts

explain voided check definition

A check that has been cancelled and therefore rendered null and void.

Category: Accounts

ex[plain what retro pay means

Retroactive pay is compensation you owe an employee for work performed during a previous pay period when you have paid them less than you should.

Category: Accounts

explain what is a burden

The burden rate is the allocation rate at which indirect costs are applied to the direct costs of either labor or inventory.

Category: Accounts

explain what is a calendar

The period for which books are balanced and the financial statements are prepared.

Category: Accounts

explain what is a debit memo

A commercial document issued by a buyer to a seller as a means of formally requesting a credit note.

Category: Accounts

A check written by the drawer for a date in the future.

Category: Accounts

explain what is a receiver

Someone who is appointed by a court of law to manage the affairs of a business, usually when it is facing financial failure.

Category: Accounts

explain what is absence

Employees time off with pay for vacations, holidays and sick day.

Category: Accounts

explain what is an allocation

To spread an expense over more than one accounting period.

Category: Accounts

explain what is an encumbrance

A claim against a property by a party that is not the owner.

Category: Accounts

definition or meaning of arrears

Money that is owed and should have been paid earlier.

Category: Accounts

definition or meaning of capitalization

The provision of capital for a company or the conversion of income or assets into capital.

Category: Accounts

definition or meaning of currency

A system of money in general use in a particular country.

Category: Accounts

explain what is eoq

Economic order quantity is the order quantity that minimizes the total holding costs and ordering costs.

Category: Accounts

explain what is ers

Evaluated Receipt Settlement ( ERS) is a procedure for the automatic settlement of goods receipts.

Category: Accounts

explain what is a journal

A record of financial transactions in order by date.

Category: Accounts

explain what is labor

The employees and temporary help who work directly on a manufacturer’s products.

Category: Accounts

explain what is override

Commission received by a sales manager on the sales made by sales persons working under him or her.

Category: Accounts

Stated value or face value.

Category: Accounts

explain what is a reference number

A unique identifier assigned to any financial transaction.

Category: Accounts

explain what is a remittance advice

A letter sent by a customer to a supplier to inform the supplier that their invoice has been paid.

Category: Accounts

explain what is retro pay

Retroactive or back pay is income owed to an employee from a previous pay period. This can be for a number reasons i.e. Incorrect salary compensation or a pay increase.

Category: Accounts

explain what is transaction

An instance of buying or selling something.

Category: Accounts

explain what is triangulation

A situation that involves a sale of goods, where three different member states in the EU are invoved and where there are two sales transactions but one transport transaction.

Category: Accounts

explain what type of account is accumulated depreciation

An asset account with credit balance. This means that it appears on the balance sheet as a reduction from the gross amount of fixed assets reported.

Category: Accounts

definition or meaning of lump sum contracts

A lump sum contract (or stipulated sum contract) is the traditional means of procuring construction, and still the most common form of construction contract. Under a lump sum contract, a single ‘lump sum’ price for all the works is agreed before the works begin.

Category: Accounts

definition or meaning of work assignment

A specified task or amount of work assigned or undertaken.

Category: Accounts

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