C

CAFETERIA PLAN

A program within a company whereby several types of company benefits are offered to each employee. Thus each employee may select those benefits wanted and those benefits rejected, usually with a maximum total benefit dollar amount.

CALL

In banking and lending, to demand repayment of the entire principal amount of a secured loan, usually when the borrower has failed to meet repayment provisions. Same as CALL THE LOAN; DEMAND LOAN. For bonds, the right to redeem outstanding bonds before their scheduled maturity.

CALLABLE

Redeemable by the issuer before the scheduled maturity. See also DEMAND LOAN.

CALL THE LOAN

See CALL.

CANCEL

To void a negotiable instrument like an order for goods or services; to prematurely terminate a contract or bond. Thus the document is annulled. Also, evidence of payment, as in a CANCELED CHECK.

CANCELED

See CANCEL.

CANCELED CHECK

A check that the bank has honored and paid in the amount written to the payee. See CHECK; CANCEL.

CAP

The maximum amount specified on a financial document, such as an amount that would be paid on a contract or the maximum interest rate on an adjustable rate loan.

CAPACITY OF PARTIES

The legal and financial ability of people or companies to enter into a valid contract. Three general broad categories exist: full capacity, limited capacity, no capacity.

CAPITAL

Wealth (money or property) owned or used in business by a sole proprietor or corporation, to produce more wealth. In a start-up business, capital is the amount of money invested by the owner, before borrowing from others. Same as EQUITY; NET WORTH. In accounting, most often capital is synonymous with the EQUITY (NET WORTH) of a business; the amount by which ASSETS exceed LIABILITIES. There are, however, really two kinds of business capital, EQUITY and LONG-TERM DEBT. In a broad sense, long-term debt is sometimes considered as capital because the money is totally under the control of the owners rather than under the control of the lender. See CAPITAL STRUCTURE. In finance, the total tangible assets of a firm.

CAPITAL APPRECIATION

The difference between the selling price and the acquisition price for a FIXED ASSET; the amount a selling price of a fixed asset is greater than the amount paid for the asset at an earlier time. Same as APPRECIATION.

CAPITAL ASSET

A LONG-TERM ASSET (REAL PROPERTY and PERSONAL PROPERTY), with a life exceeding one year; property that is not usually bought or sold in the normal course of conducting the business. Generally, the same as a major FIXED ASSET, such as land, buildings, equipment, furniture or fixtures. For tax purposes, the IRS publishes a very precise definition of capital asset.

CAPITAL BUDGET

A plan or amount of money to be used for financing major purchases of CAPITAL ASSETS at some future time; a list of planned investment expenditures and the timing of such expenditures. See also BUDGET.

CAPITAL DEPRECIATION

The wearing out of a CAPITAL ASSET, often measured by its decline in value. Same as DEPRECIATION.

CAPITAL EQUIPMENT

The assets of a company that are used in the production process, such as machinery. Most often capital equipment refers to long-term assets, but it can include short-term assets as well. Such equipment will not be sold in the normal course of business but will be used, worn out or consumed over time as business is conducted.

CAPITAL EXPENDITURE

A disbursement of money to acquire or improve a CAPITAL ASSET; the cost of purchasing or improving real property and other tangible property used in the conduct of the business.

CAPITAL FORMATION

In a start-up, the assembling of all the moneys (equity and loans) to begin operation. Also, a savings program intended for starting a business or for a future major purchase, such as a CAPITAL ASSET, usually to be used for the production of goods or services.

CAPITAL GAIN

The profit derived from the sale of a CAPITAL ASSET; the positive difference between the selling price and the purchase price (or DEPRECIATED BASIS) of a capital asset. See also CAPITAL LOSS. For taxing purposes, the IRS precisely differentiates SHORT-TERM CAPITAL GAINS (less than one year) from LONG-TERM CAPITAL GAINS (more than one year).

CAPITAL GAINS TAX

A tax paid on the CAPITAL GAIN from the sale of an ASSET. Often, the tax rate is lower than the ordinary income rate, to encourage investment, but the tax rate can be higher.

CAPITAL GOODS

Materials or products (goods) used in the production of other products (goods), such as industrial buildings or machinery. Same as CAPITAL ASSET. In government, capital goods include highways and government installations, which form a country’s productive capacity.

CAPITAL IMPROVEMENT

Any addition or betterment made to a CAPITAL ASSET, usually to extend the useful life of the property or to upgrade to higher quality, size or capacity. Any structural improvement to REAL PROPERTY is a capital improvement.

CAPITAL-INTENSIVE

Requiring a large investment in CAPITAL ASSETS (money); a high proportion of FIXED ASSETS, as opposed to LABOR INTENSIVE.

CAPITAL INVESTMENT

The amount of money put in (INVESTED in) a business by the owner; the investment of money; EQUITY. Also, the purchase of a CAPITAL ASSET (FIXED ASSET), such as a building or machinery; also called CAPITAL EXPENDITURE.

CAPITALISM

An economic system of government in which 1) private ownership of property exists; 2) CAPITAL ownership can provide income to the owners; 3) relative freedom of competition for economic gain is permitted; 4) the profit motive is basic to economic life. Also called FREE ENTERPRISE SYSTEM.

CAPITALIZATION

The par value of all stock plus the face amount of outstanding bonds and loans. See CAPITAL STRUCTURE. Also, the mathematical procedure for converting income into an indication of value (principal), such as the income approach to an appraisal.

CAPITALIZATION RATE (CAP RATE)

The INTEREST RATE that would be used to convert a series of future payments into a single PRESENT VALUE.

CAPITALIZATION RATIO

The proportions of a firm’s CAPITAL STRUCTURE in its various elements as percentages of LONG-TERM DEBT, BONDS, PREFERRED STOCK and COMMON STOCK. The ratios are useful in evaluating risk and leverage.

CAPITALIZE

In accounting, to add to an asset account; a change in the accounting classification of something from an EXPENSE to a FIXED ASSET, such as a CAPITAL EXPENDITURE. To turn something into one’s economic advantage, such as to sell umbrellas on a rainy day. See also CAPITALIZED VALUE; CAPITAL LEASE.

CAPITALIZED VALUE

A schedule of INCOME converted into a PRINCIPAL amount; to CAPITALIZE the income.

CAPITAL LEASE

A lease obligation that is converted to a balance sheet entry as an ASSET and a corresponding liability. Generally applies to a lease where the lessee acquires essentially all of the economic benefits and risks of the leased property.

CAPITAL LOSS

A loss derived from the sale of a CAPITAL ASSET; the amount by which the proceeds from the sale of an asset are less than the cost of acquiring it. Opposite of a CAPITAL GAIN. For tax purposes, a capital loss may be used as an expense to reduce income.

CAPITAL MARKET

Private and public sources for obtaining CAPITAL, including both debt and equity. Also, the place (market) where buying and selling of these instruments occur.

CAPITAL OUTLAY

See CAPITAL EXPENDITURE.

CAPITAL REPATRIATION

The transfer of company money or property from a foreign country back to its home country. Some foreign governments restrict this action to prevent a drain of capital or exploitation by the company to its home country.

CAPITAL REQUIREMENTS

The permanent financing needed for the normal operation of a business; that is, to finance fixed assets and working capital. Also, the appraised investment in fixed assets plus the normal amount of working capital.

CAPITAL STOCK

In accounting, a term used to identify the various classes or categories of equity investment in a corporation, such as AUTHORIZED STOCK, ISSUED AND OUTSTANDING, TREASURY STOCK, and UNISSUED STOCK. Capital stock includes COMMON STOCK and PREFERRED STOCK. The financial framework of a corporation consists of LONG-TERM DEBT, PREFERRED STOCK, BONDS and EQUITY; the CAPITALIZATION of the corporation. As contrasted with FINANCIAL STRUCTURE, which includes such additional sources of capital as short-term debt and accounts payable.

CAPITAL SURPLUS

A common umbrella term for the classification of EQUITY other than CAPITAL STOCK and RETAINED EARNINGS, such as: 1) stock issued at a premium over par; 2) proceeds from stock bought back and then resold; 3) a reduction of par value; 4) reclassification of capital stock; 5) donated stock; 6) acquisition of a company that has a capital surplus. Also called PAID-IN SURPLUS; SURPLUS.

CAPITAL TURNOVER

Annual sales divided by equity, a measure of the ability to grow without additional capital investment. Companies with a high profit margin generally have a low capital turnover. Also called EQUITY TURNOVER.

CAP RATE

See CAPITALIZATION RATE.

CARRYBACK

In accounting, a transaction during one period that requires a correction to an earlier period. Opposite of CARRYFORWARD. See also CARRYBACK FINANCING.

CARRYBACK FINANCING

A situation involving purchase of an asset whereby the seller holds a note (lends the money) for part of the purchase price.

CARRYFORWARD

In accounting, a transaction during one period that is recorded in a subsequent period. Opposite of CARRYBACK.

CARTEL

An agreement among a group of businesses or nations in the same field that agree to influence prices by regulating production and marketing practices to secure a national or international monopoly. However, a cartel has less control over an industry than a MONOPOLY. A number of nations, including the United States, have laws prohibiting cartels. TRUST is sometimes used as a synonym for cartel.

CASH

In accounting, an asset on the balance sheet comprising cash on hand, paper currency, coins, bank balances, negotiable money orders and checks; MONEY or MONEY EQUIVALENTS. To cash a negotiable instrument (as a check) is to convert it into money (paper currency and coins).

CASH BASIS

An accounting method whereby income is recognized when money is received, and expense items are recognized when money is paid, regardless of when material is received or work is done. For alternative methods, see MODIFIED CASH BASIS and ACCRUAL BASIS. Most small and start-up businesses use the MODIFIED CASH BASIS accounting method.

CASH BUDGET

An estimate, for a future period, of cash receipts and cash payments; a CASH FLOW analysis. See BUDGET; CASH FLOW.

CASH CONVERSION CYCLE

The elapsed time required to convert raw materials into finished goods, finished goods into sales and receive the money after the goods have been sold. This cycle is financed by the availability of WORKING CAPITAL and is directly affected by production efficiency, credit policy and other controllable factors. In shorter cycles, working capital is generated sooner requiring fewer borrowed funds. Small businesses should work diligently to keep the cash conversion cycle as short as possible. The cash conversion cycle is directly related to INVENTORY TURNOVER. Sometimes called EARNINGS CYCLE; CAPITAL TURNOVER.

CASH COW

A product or service that provides large revenues and large profit margins associated with low operating costs, often because of product recognition without advertising or because of a technological advantage.

CASH DISBURSEMENT

A payment of money or simply a payment. Usually, the writing of a check to pay for an item previously obligated to be paid, such as loan payment, salary payment or accounts receivable payment. See also DISBURSEMENT.

CASH DISCOUNT

An amount that the originally listed sale price is reduced when the product/service is sold, i.e., payment upon delivery of the product or rendering of the service as opposed to the listed sale price that would be paid if bought on credit. Sometimes, when a short grace period is permitted, price is still reduced for a cash sale, such as two percent discount if paid within 10 days.

CASH EQUIVALENTS

All short-term, highly liquid investments that are readily convertible into cash, e.g., treasury bills.

CASH FLOW

The actual movement of cash within a business: money inflow minus money outflow. In an accounting sense, an analysis of all the transactions that affect the cash account during an accounting period; the spendable income of a business (cash received less expenses paid) over a given period of time. In the analysis, SOURCES OF CASH are shown along with USES OF CASH. When more money comes in than goes out, we speak of POSITIVE CASH FLOW. Conversely, when more money goes out than comes in, we speak of NEGATIVE CASH FLOW. Companies with assets well in excess of liabilities may nevertheless go bankrupt because they cannot generate enough cash to meet current obligations.

CASH FLOW ANALYSIS

An evaluation of the sources and uses of the money by a business. See CASH FLOW.

CASH FLOW FORECAST

A prediction of future money income and outgo; a CASH FLOW PROJECTION; a CASH FLOW STATEMENT.

CASH FLOW PROJECTION

A prediction of future money income and outgo, forecasted sources of cash and forecasted uses of cash. A regular analysis of CASH needed in the future will help avoid many financial problems. A cash flow projection can make the difference between success and failure, as well as the difference between growth and stagnation. Making a cash flow projection is THE MOST IMPORTANT TOOL available to the small business person. A detailed method of preparing a cash flow projection is presented in Self-Help Guide I.

CASH FLOW STATEMENT

An accounting presentation of the amounts of money coming in over a period of time compared to the amounts of money going out over the same time period; a summary of all cash transactions during a period. See CASH FLOW; CASH FLOW PROJECTION.

CASHIER

A person whose job is the day-to-day receipt and disbursement of cash; a person receiving cash for the sale of merchandise; the person responsible for PETTY CASH.

CASHIER’S CHECK

A monetary bill of exchange (check) drawn by a bank (usually signed by its cashier) upon itself as issuer and payable upon demand. It is like a promissory note executed by a bank. A cashier’s check is, however, still subject to a stop payment order by the maker. See CHECK; CERTIFIED CHECK; PERSONAL CHECK.

CASH MANAGEMENT

The utilization of prudent and thrifty methods of money income and outflow; planning for cash expenditures and providing adequate money for payment; using techniques such as CASH BUDGET, CASH FLOW ANALYSIS and EXPENDITURE FORECAST. Cash management seeks to make less cash do more work.

CASH METHOD

See CASH BASIS.

CASH ON DELIVERY (COD)

A transaction requiring that goods be paid for in full by cash or a cash equivalent at the point of title transfer from seller to buyer, most often after delivery by a transportation company. Cash on delivery is most frequent when buyer and seller are separated by geographical location or shipping time. If the buyer refuses the order, seller must bear round trip shipping expenses. Sometimes called collect on delivery.

CASH ON HAND

Specifically, all money, cash and cash equivalents in the business cash registers and safes on the business premises; as opposed to cash in the bank. Same as CASH.

CASH-OUT

A situation where the seller desires quick sale for money without any financing or credit by the seller.

CASH POSITION

See LIQUIDITY.

CASH RECEIPTS

Money received (usually from sales) by a company in whatever form; as opposed to sales on credit.

CASH REGISTER

The machine used in retail businesses for recording transactions of money received as items are sold.

CASH REGISTER TAPE

The paper or magnetic recording of transactions from a CASH REGISTER.

CASH SALES

Goods or services sold for cash money, as opposed to CREDIT SALES.

CASH SURRENDER VALUE

In insurance, the monetary amount that would be paid by the insurer to the policyholder if the policy were canceled. Usually, life insurance companies will permit a loan against the cash surrender value, often at lower than market rates. Cash surrender value of life insurance on the principals of a business (called KEY MAN INSURANCE) is shown on a balance sheet as an asset.

CASH SURRENDER VALUE OF LIFE INSURANCE (CSVLI)

See CASH SURRENDER VALUE.

CASH VALUE

In business, the worth, in dollars, of an asset. In insurance, the monetary amount that could be received if the policy were canceled or surrendered; the CASH SURRENDER VALUE.

CASUAL LABOR

Workers employed for temporary periods and for specific jobs or tasks. See TEMPORARY WORKER.

CAVEAT EMPTOR

Let the buyer beware; a sale in an “AS IS” condition. Without inspection the buyer purchases the goods at his or her own risk.

C-CORPORATION

The identification of a type of CORPORATION for legal or tax purposes, distinct from other forms such as CLOSELY HELD CORPORATION or S-CORPORATION.

CENTRAL BUSINESS DISTRICT

A city’s downtown area where the main businesses are concentrated, along with government, professional and service activities.

CEO

See CHIEF EXECUTIVE OFFICER.

CERTIFICATE

A formal declaration that can be used to document a fact. In business, finance and investments, certificate is often used in conjunction with other descriptive words. See the specific grammatical business phrase of interest, such as stock certificate or insurance certificate.

 CERTIFICATE OF DEPOSIT

A statement from a bank certifying that the named person or firm has a specified sum of money on deposit. The certificate states the date of certificate purchase, payor, payee, amount on deposit, interest rate and due date.

CERTIFICATE OF INCORPORATION

A document of fact as formal declaration of the existence of a corporation as a business entity. The Certificate of Incorporation is issued by the state where the ARTICLES OF INCORPORATION are filed.

CERTIFICATE OF INSURANCE

A document issued by an insurance company verifying coverage of property, specifying the amount of coverage.

CERTIFICATE OF ORIGIN

In international trade, a document attesting that goods were produced in a specific country.

CERTIFIED ACCOUNTING STATEMENT

A BALANCE SHEET or INCOME STATEMENT on which the reviewing independent public accountant has signed his or her name as evidence of the accuracy and integrity of the information. See ACCOUNTANT’S OPINION.

CERTIFIED CHECK

A check for which a bank guarantees payment. When a check is certified, it legally becomes an obligation of the bank, and the funds to cover the check are immediately drawn from the depositor’s account. See also CHECK; CASHIER’S CHECK; PERSONAL CHECK.

 CERTIFIED COPY

A copy of a document that is signed by the person having possession of the original, declaring it to be a true copy; sometimes attested to by a NOTARY PUBLIC.

CERTIFIED DEVELOPMENT CORPORATION (SBA 504 LOAN PROGRAM)

A private corporation established to provide capital improvement financial assistance to existing businesses whereby the financing is guaranteed by the SBA.

 CERTIFIED FINANCIAL STATEMENT

A PERSONAL FINANCIAL STATEMENT or BUSINESS FINANCIAL STATEMENT that has been reviewed and authenticated by a CERTIFIED PUBLIC ACCOUNTANT. CERTIFIED LENDER A bank approved by the U.S. Small Business Administration (SBA) for making GUARANTEED LOANS under the CERTIFIED LENDER PROGRAM (CLP). CERTIFIED LENDER PROGRAM (CLP) A U.S. Small Business Administration program whereby banks are pre-approved as qualified to submit applications for U.S. Government GUARANTEED LOANS. Also see PREFERRED LENDER PROGRAM (PLP).

CERTIFIED PUBLIC ACCOUNTANT (CPA)

A licensed public accountant by a state. A professional accountant of highest standing who has passed certain exams, achieved a certain amount of experience, reached a certain age and met all other statutory and licensing requirements of the state of the United States where he or she performs the services. See also BOOKKEEPER; ACCOUNTANT. CERTIFIED PUBLIC ACCOUNTING FIRM A professional corporation that is owned and controlled by a CERTIFIED PUBLIC ACCOUNTANT and is practicing in the field of accounting.

CERTIFY

To testify in writing; to confirm; to guarantee in writing, as a certified check; to endorse, as with a seal.

CHAIN

A large company with many retail outlets called CHAIN STORES.

CHAIN OF COMMAND

The proper lines of authority from the head of an organization, through directors, managers and supervisors to the workers. A good manager will ensure employees and customers understand the order of authority and the method of communicating with management.

CHAIN STORE

Any one of a number of retail stores under common ownership, under common management, selling standardized products and operating under a uniform policy.

CHAIRMAN OF THE BOARD

The highest ranking position in a corporation; the member of the board of directors who presides over board meetings. However, the chairman of the board may not always have the greatest actual authority; this is reserved for the CHIEF EXECUTIVE OFFICER. Sometimes the title is honorary. In small companies, it is common for one person to hold several titles. See BOARD OF DIRECTORS.

CHAIRMAN OF THE BOARD OF DIRECTORS

The highest ranking position in a corporation; the member of the board of directors who presides over board meetings. However, the chairman of the board may not always have the greatest actual authority; this is reserved for the CHIEF EXECUTIVE OFFICER. Sometimes the title is honorary. In small companies, it is common for one person to hold several titles. See BOARD OF DIRECTORS.

CHAMBER OF COMMERCE

An organization of persons and businesses that is interested in promotion of business and the betterment of business operations in a given area.

CHANGE ORDER

A contract revision initiated after work has begun on a signed contract, often arising from unforeseen work at the outset of the original contract.

CHAPTER 11 (ELEVEN)

A provision of bankruptcy under which a company that has declared bankruptcy can continue to operate, under protection and supervision of the court, while the company develops a way to pay its debts.

 CHAPTER 7 (SEVEN)

A bankruptcy provision that requires a company to liquidate its assets for the benefit of its creditors under supervision of the court.

CHARGE

To record a debt against a person or business account, such as to charge a purchase. Also to specify the price or fee-such as, What do you charge for this product?

CHARGE ACCOUNT

An account by a business with a person against which debts are recorded. Charge account means regular trading and transactions, such as purchase of merchandise or services by a person from a business on credit, wherein payment is made at a later date. Similar to OPEN ACCOUNT, which is a commercial account (a business-to-business account). See ACCOUNT.

CHARTER

A business charter consists of two documents, the ARTICLES OF INCORPORATION and the CERTIFICATE OF INCORPORATION, both of which are required to establish the existence of a corporation. See ARTICLES OF INCORPORATION.

CHARTERED LIFE UNDERWRITER (CLU)

A life insurance sales agent of highest professional standing who has qualified for the title by completing advanced coursework.

CHARTER PROPERTY CASUALTY UNDERWRITER (CPCU)

A property and casualty insurance sales agent of highest professional standing who has qualified for the title by completing advanced coursework.

CHART OF ACCOUNTS

A listing of typical account names, descriptions and classifications that are used for recording accounting transactions. For a start-up business, the chart of accounts can provide a guideline for selection of those accounts that should be established for recording the financial transactions of the business.

CHATTEL

An item of personal property. Chattels are transferred by a BILL OF SALE. The Uniform Commercial Code regulates the transfer of chattels and the use of chattels as security for debts.

CHATTEL MORTGAGE

A mortgage secured by personal property. Under the Uniform Commercial Code, chattel mortgages have been replaced by security agreements. See SECURITY AGREEMENT.

CHECK

A negotiable instrument authorizing a bank to pay money to the payee (bearer); a monetary bill of exchange often used in lieu of cash money that authorizes a bank to withdraw previously deposited money upon demand from the issuer’s account for payment to the payee’s account. A check identifies the date of issue, payee name and amount, and is signed by the issuer. A check is considered as cash and is negotiable when endorsed. Types of checks include PERSONAL CHECK, CASHIER’S CHECK; CERTIFIED CHECK. Also, to review by notation; to witness; to compare or examine for verification of correctness; a mark (?) to show approval.

CHECKBOOK

A document containing BLANK CHECKS that have not been written and CHECK STUBS that record checks that have been written. Thus, the checkbook contains an accurate record of transactions made from the checking account along with a current balance on the account.

CHECKLIST

An orderly compilation of information for ease of comparison with other types of information.

CHECK STUB

A document in some checkbooks for recording payee, amount, date and other information about checks written.

CHIEF EXECUTIVE OFFICER (CEO)

The company officer principally responsible for activities of the company. The officer of a company with the highest ranking executive authority and often, an additional title for the chairman of the board of directors, the president, or other senior officer.

CIF

A commercial acronym standing for “Cost, Insurance and Freight.” If the value of a shipment is expressed in CIF terms, the invoice as shipped includes all costs, prepaid insurance and freight-out shipping costs. See also C & F. As opposed to F.O.B.

CIRCULAR E

See EMPLOYER’S TAX GUIDE.

CLAIM

To demand or ask for, as rightfully belonging or due to the person or business that makes the claim; assert one’s right to title or benefit; a statement of fact that may be called into question. In insurance, a statement by a policyholder as to the amount of money due resulting of a covered loss.

CLAIM CHECK

A document given by a business to a customer as a receipt for customer goods received by the business. For example, a customer can reclaim goods after repair has been made.

CLAIMS MADE

A method for determining whether or not insurance coverage is available for a specific claim. A claim made during the term of the liability insurance policy is reimbursed by the insurance company, up to policy limits, regardless of when the event occurred that caused the claim. See also OCCURRENCE FORM.

CLAIMS MADE FORM

A method for determining whether or not insurance coverage is available for a specific claim. A claim made during the term of the liability insurance policy is reimbursed by the insurance company, up to policy limits, regardless of when the event occurred that caused the claim. See also OCCURRENCE FORM.

CLASS OF STOCK

In a corporation, the ARTICLES OF INCORPORATION will identify the authorized class of stock (COMMON STOCK or PREFERRED STOCK), which is used as the means for acquiring EQUITY on the corporation.

CLAUSE

A single statement, condition or provision specified in a contract.

CLEAN DRAFT

SEE DRAFT.

CLEAR

In banking, withdrawal of funds from the account of the issuer and payment of those funds to the holder of the check. When a check is said to have “cleared,” the payee has received the amount specified and the bank has deducted the specified amount from the account of the account holder. In finance, not encumbered; an asset not used as security for a loan; an asset free of debt. Comparison of the details of a transaction to assure accuracy or agreement of the parties. To make a profit, such as “after expenses we cleared an amount of net profit.”

CLERICAL

Relating to routine administrative, office or accounting work; the work of a CLERK.

CLERK

A retail store employee; an office worker who keeps records, types letters, does filing or posts accounting entries.

CLIENT

A customer of a professional service, such as legal, accounting, advertising or consulting.

CLOSE AN ACCOUNT

All entries for a period are completed or the account is terminated. In banking, to withdraw all funds on deposit from the bank.

CLOSE CORPORATION

A CORPORATION owned by a few people, all or most of whom are directly involved in the conduct of the business, usually members of the management family. Differs from a CLOSELY HELD CORPORATION in that shares are not for sale to the public nor are shares held by outside investors, and there is no public market. Also called PRIVATE CORPORATION; PRIVATELY HELD CORPORATION. See also CORPORATION.

CLOSED CORPORATION

A CORPORATION owned by a few people, all or most of whom are directly involved in the conduct of the business, usually members of the management family. Differs from a CLOSELY HELD CORPORATION in that shares are not for sale to the public nor are shares held by outside investors, and there is no public market. Also called PRIVATE CORPORATION; PRIVATELY HELD CORPORATION. See also CORPORATION.

CLOSED SHOP

A company that hires only union labor, a company that requires union membership as a condition of employment.

CLOSELY HELD CORPORATION

A CORPORATION owned by relatively few people, all or most of whom are directly involved in the conduct of the business, with few shares of stock held by outside investors. Differs from a CLOSED CORPORATION because enough shares of stock are publicly held to provide a basis for trading. Shares held by the controlling group are not likely to be available for purchase by the public. See also CORPORATION.

CLOSING

An accounting definition of the time when the books are completed for a specific period of time and summarized into financial statements for the company. After this date, no other entries are permitted for the period. Also, the final conclusion of other transactions, such as real estate purchase.

CLU

See CHARTERED LIFE UNDERWRITER.

COD

See CASH ON DELIVERY.

CO-ENTREPRENEURS

Two owners of a start-up venture, often used when referring to an unmarried couple but not limited to that. See MOM & POP BUSINESS.

COGS

See COST OF GOODS SOLD.

CO-INSURANCE

Sharing of an insurance risk; a provision in an insurance policy or contract requiring the insured party maintain some amount and type of insurance to protect another party from certain provisions of the policy or contract if a loss occurs. Co-insurance is prudent when one company cannot underwrite the entire risk or when more that one company is working on the same project. Also, co-insurance can apply to a situation wherein you insure for 100 percent and your business assumes co-insurance for 20 percent (20 percent FLOOR or 20 percent DEDUCTIBLE); thus, your insurance premium is much less because you have assumed only 20 percent of the loss.

COLA

See COST OF LIVING ADJUSTMENT.

COLD CALL

A telephone call or personal visit to a potential customer without prior introduction, letter or leads. Prior to the cold call, the potential customer may have no knowledge of the product or service offered for sale.

COLD CANVAS

A series of COLD CALLS that entirely covers a particular location or a specific segment of potential customers.

COLLATERAL

Assets given as security for a loan; something of value (an ASSET) pledged to a lender as security for a LOAN or DEBT. If the BORROWER fails to repay (DEFAULTS on) the loan according to the terms, the LENDER has the legal right to seize the collateral and take legal title to the property. The borrower can sell the collateral to repay the loan.

COLLATERALIZED LOAN

A loan secured by COLLATERAL; a loan on which an asset has been pledged. See COLLATERAL.

COLLATERALIZED MORTGAGE

A loan secured by an asset, such as real estate, against which the loan is made. See COLLATERAL.

COLLECTION

Receipt of money from a customer for goods or services previously sold; conversion of ACCOUNTS RECEIVABLE into cash. Referral of past due accounts to a specialist for collection of the amount due on a loan or account receivable, such as a collection agency. In banking, the presentation of a negotiable instrument, such as a check or draft, to the place at which it is payable, and receiving cash or a cash equivalent.

COLLECTION ACCOUNT

An account established to receive periodic payments on a debt or obligation and make disbursements from the account as requested by the payee.

COLLECTION AGENCY

A firm that specializes in accepting past due accounts (loans or accounts receivable), locating the debtor and obtaining the funds from the debtor.

COLLECTION FLOAT

The time between a sale made (the extension of credit for a sale) and receipt of the money. It is prudent to set an interest rate for this period at a rate greater than the normal return on assets. Both internal and external factors affect the FLOAT period. Internal factors (controllable by the firm) include fast order entry, invoicing, billing and follow-up until paid. External factors include speed of payment by the customer, distance and speed of collection in cash by the firm. See FLOAT.

COLLECTION PAPER

All the documents (commercial invoices, bills of lading, etc.) submitted to a buyer for the purpose of receiving payment for goods delivered.

COLLECTIVE BARGAINING

The process by which labor and management negotiate mutually acceptable wages and other conditions of employment.

CO-MAKE

See COSIGN.

CO-MAKER

See COSIGNER.

COMMERCE

Trade; the buying and selling of goods and services, especially when done on a large scale, such as between cities, states or countries.

COMMENCEMENT OF WORK

The noticeable beginning of work on a contract as determined under local law.

COMMERCIAL

A business-to-business relationship. As opposed to a business-to-person relationship.

COMMERCIAL ACCOUNT

An ACCOUNT that is for the transaction of business with another company, as opposed to a PERSONAL ACCOUNT for the transaction of business with a person.

COMMERCIAL BANK

See BANK.

COMMERCIAL COUNTERFEIT

A product that is a copy of an original product to such a degree that it deceives the buyer into believing the product to be produced by the original manufacturer.

COMMERCIAL CREDIT COMPANY

A company engaged in making loans to other businesses. Unlike a bank, a commercial credit company does not receive deposits; it obtains financing from banks and others sources. Businesses that do not qualify for bank credit often can obtain a loan from a commercial credit company. See also: 1) a CONSUMER FINANCE COMPANY, which makes small loans directly to individuals; and 2) an ACCEPTANCE COMPANY, which purchases consumer loans (PAPER) from others.

COMMERCIAL FINANCE COMPANY

See COMMERCIAL CREDIT COMPANY.

COMMERCIAL INVOICE

See INVOICE.

COMMERCIAL LOAN

A LOAN made by a COMMERCIAL BANK to a business. As opposed to a PERSONAL LOAN, which is made to a person. About 95 percent of all commercial loans are made to small businesses.

COMMERCIAL PAPER

Short-term loans with maturities ranging from two days to nine months issued by banks and companies. to obtain cash. Usually commercial paper is unsecured and discounted, although some bear interest. Some may be long-term.

COMMERCIAL PROPERTY

A classification of real estate used for business purposes. Commercial property usually must be zoned for the specific type of business operation. As opposed to property that is for residential, farm or industrial use.

COMMINGLE

See COMMINGLING.

COMMINGLED FUNDS

See COMMINGLING.

COMMINGLING

In finance and accounting, to mix or mingle financial information from two or more separate entities. For example, business financial records must be kept separate from personal financial records. To commingle business and personal money is illegal.

COMMISSION

The compensation paid to an employee, agent or broker based on performance. For example, a salesman may be paid a percentage (a commission) of the amount of products sold, or a third-party broker receives a commission when a transaction is consummated between two other parties.

COMMITMENT

A pledge or promise to perform a certain act, such as to execute a contract agreement or to adhere to certain quality standards.

COMMITMENT FEE

An amount paid to another party to secure a loan or guarantee a performance; an amount paid to a lender to reserve credit availability at a future time.

COMMODITIES

Generally, commodities refer to bulk goods such as food, grains, metals and all types of raw materials. Yet, broadly defined, commodities may refer to any type of good.

COMMODITY AGREEMENT

An agreement on the price at which COMMODITIES will be bought and sold, often an agreement between exporting and importing countries.

COMMON SHARES

Same as COMMON STOCK.

COMMON STOCK

A unit (share) of ownership of a public corporation; the term applies to the most junior form of ownership. The person owning shares of common stock (SHAREHOLDER) is entitled to the four basic rights of ownership: 1) proportionate share of the corporation’s undivided assets; 2) one vote for each share at the annual meeting; 3) paid dividends from corporate earnings as declared by the Board of Directors; 4) PREEMPTIVE RIGHT to subscribe to additional stock offerings before they are available to the general public. See STOCK; SHARE.

COMMUNITY PROPERTY

Property and income accumulated by a married couple and belonging to them jointly together in a 50%/50% relationship for each spouse. The two have equal rights to the income and assets as well as the appreciated value of the assets.

COMMUNITY PROPERTY STATE

A state of the United States wherein the law of the state requires all property of married couples to be defined as COMMUNITY PROPERTY.

COMPANY

An organization engaged in buying and selling products or services, including all business types (proprietorship, partnership and corporation). Often, company is used interchangeably with corporation. See also FIRM.

COMPARATIVE ADVANTAGE

A concept of trade theory wherein a country or region should produce those goods and services that can be produced most efficiently and at least cost to achieve a favorable competitive and profitable posture over other countries or regions. Most often comparative advantage applies to products or services in international trade but applies equally well to INTRADE and EXTRADE.

COMPENSATING BALANCE

The average balance required by a bank to make credit available; funds deposited with a bank as an inducement to extend a line of credit or make a loan.

COMPETITION

The existence of many businesses engaged in the same business or trade vying for the same customers. See PERFECT COMPETITION.

COMPETITIVE

The act of vying for success in a business; more than one company engaged in an area of business activity attempting to obtain the available potential sales.

COMPETITIVE ADVANTAGE

Technological superiority, higher quality, better distribution availability or lower cost that attracts buyers.

COMPETITIVE WAGE RATE

A payment to employees for work that is generally equivalent to the payment made to others performing similar work.

COMPLETED CONTRACT METHOD

A procedure for computing payments on a contract whereby payment is made only after the entire job is satisfactorily completed. As opposed to PROGRESS PAYMENTS.

COMPLETION BOND

A type of insurance that guarantees accomplishment (completion) of work on a contract. See PERFORMANCE BOND.

COMPOUND INTEREST

An accumulation of INTEREST where each interest payment is added to the investment amount, rather than paid in cash to the investor. In succeeding periods, the interest amount is increased because of the amount of accumulated prior interest on which later interest is also calculated; interest earned on prior interest paid. As opposed to SIMPLE INTEREST. Interest can be compounded (multiplied by itself) annually, monthly, daily or on any other regular basis.

COMPOUND INTEREST RATE

The annual percentage value used for calculations of COMPOUND INTEREST; as opposed to SIMPLE INTEREST RATE.

COMPOUND TARIFF

A TARIFF for a good that combines both a SPECIFIC TARIFF plus an AD VALOREM TARIFF.

COMPUTER

See PERSONAL COMPUTER.

CONCESSION

To relinquish one contract provision in place of another provision. During the negotiation process, some small areas of a contract (the concessions) may be relinquished in order to secure a more lucrative larger total contract order. A franchise right granted by a government agency (also at a sports stadium, airport or other entity) for the conduct of business on the premises.

CONDITIONS

Provisions in a contract that clearly describe the manner or method of accomplishment; the environment under which the contract must be executed.

CONFIRMED LETTER OF CREDIT

An international LETTER OF CREDIT that is issued by a foreign bank and validity is verified (confirmed) by a U.S. bank. Thus payment from the buyer to the seller is assured.

CONGLOMERATE

A firm that produces a wide variety of largely unrelated goods and services or a company with a wide variety of dissimilar subsidiaries and other controlling rights. The only apparent tie is the profit motive.

CONSIDERATION

An act or the promise thereof that is offered by one party to induce another to enter into a contract; money or property that is given in exchange for something from another.

CONSIGNMENT

Delivery of merchandise from a seller to a buyer under agreement whereby the buyer intends to resell the merchandise. After the merchandise is sold by the buyer, payment is made to the first seller.

CONSOLIDATE

To unite, combine or incorporate into a more concise business operation; the collection of several financial matters into a single account, i.e., consolidate the books or accounts. Also to merge several businesses into a larger business or conglomerate.

 CONSULAR INVOICE

A document, required by some foreign countries, that describes the goods shipped, showing information such as the consignor, consignee and value of the shipment as certified by a consular official of the foreign country. The consular invoice is used by customs officials to verify the value, quantity and nature of the shipment.

CONSULTANT

An expert specialist, person or company called on, for a fee, to provide professional or technical advice, information, opinions, knowledge or services.

CONSULTING

The process of providing professional or technical expert knowledge or guidance to a small business. A fee is usually charged by the CONSULTANT for the service provided. Also, seeking such professional or technical advice, i.e., consulting a lawyer.

CONSUMER

A person or business that buys goods or services for his or her own needs, not goods purchased for resale. As opposed to PRODUCER who purchases goods for the production of other goods or WHOLESALE who purchases for resale.

CONSUMER FINANCE COMPANY

A company that makes small loans directly to individuals. See FINANCE COMPANY. CONSUMER GOODS Goods or services purchased for personal, household, or business use and to be consumed or used up; goods that are not to be resold. Includes items such as food, clothing, utilities, entertainment and supplies; as distinguished from CAPITAL GOODS. See CONSUMER.

CONSUMER LOAN

Money borrowed by a customer (consumer), usually to finance the purchase of a product or service at the time of the sale. See also PERSONAL LOAN.

CONSUMER PRICE INDEX (CPI)

A measure of change in consumer prices, revised monthly by the U.S. Bureau of Labor Statistics. Prices are calculated as products reach the consumer; consisting of components such as cost of housing, food, transportation and insurance. CPI measures the consumer effects resulting from inflation and reduced purchasing power. Also called cost-of-living. The equivalent for manufactured goods is the PRODUCER PRICE INDEX.

CONSUMMATE

To bring to a completion, such as a jointly-signed contract that would consummate a deal.

CONTINGENCY

A provision placed in a contract that requires the completion of a certain act or the happening of a particular event before some part of the contract is binding.

CONTINGENT LIABILITY

A potential obligation of a grantor; a debt that is not now the responsibility of a person or business but could be due and payable under some circumstances, such as a cosigner on a note by another. The cosigner must repay the note if the maker fails to repay. Also an open bank line of credit that could be obligated if a draft is signed. In business, many items are considered contingent liabilities, such as pending lawsuit, judgment under appeal, disputed claim, delinquent or contested taxes, environmental hazard, lien waiver, lien and long-term commercial property lease i.e., items posing potential financial liability in the event of an adverse outcome.

CONTRACT

An agreement whereby services, rights or acts are exchanged for payment. To be valid, a contract must be mutual and freely accepted by both competent parties and cover legal and moral transactions. In business, a contract identifies the services to be performed, the provider, the recipient, the amount of payment, the date of completion and other provisions and clauses.

CONTRACT COMPLETION

The time when all activity associated with a CONTRACT has been accomplished; all work is done and all bills have been paid. Payment may not yet have been received for the completed work.

CONTRACT LABOR

Service by a person who is paid in accordance with the terms of a contract. See CONTRACT.

CONTRACTOR

A company that works for others under the terms of a CONTRACT. See also INDEPENDENT CONTRACTOR.

CONTRA-ENTRY

In double-entry bookkeeping, a corresponding credit entry for each debit entry and vice versa.

CONTRIBUTED CAPITAL

Same as CAPITAL INVESTMENT.

CONTROL

To regulate the financial affairs of the business; to exercise authority over the conduct of the business; to verify by comparison with duplicate register, such as payments and accounts.

CONTROL ACCOUNT

An account that summarizes the total of related items from other accounts; a summary account. Several SUBSIDIARY ACCOUNTs may be summarized into a control account.

CONTROLLABLE EXPENSES

Those things over which decisions can be exercised concerning the amount of money to be paid out.

CONTROLLER

A company executive who is responsible for the firm’s financial affairs, including budget, accounting and auditing.

CONVERTIBLE SECURITY

A bond or preferred stock that may be exchanged for common stock.

COOLING-OFF PERIOD

A kind of grace period provided by law or by contract during which a party to a contract can legally withdraw from the contract; a right of recession. In management and labor relations, a period after expiration of a labor contract to allow the participants to regroup and reconsider their respective positions. Labor cannot strike and the company cannot lock-out the employees.

COOP

A common abbreviation for COOPERATIVE. See COOPERATIVE.

COOPERATIVE

An organization owned by its members who agree to combine their resources to achieve greater results than they could achieve individually. Most common in agricultural products but also in some real estate ventures. Commonly, any group of people or businesses with common interests that join together to gain the advantage of pooled buying or selling.

COOPERATIVE ADVERTISING

ADVERTISING that involves two or more participants in which all participants benefit. Two main types exist: 1) a retailer in cooperation with a manufacturer or a supplier; and 2) an advertisement that benefits a group of peers, such as merchandisers in a shopping mall. Cooperation exists in areas such as preparation, media, distribution and payment.

COPYRIGHT

The exclusive right granted by law for a specified period of time to an author to publish, produce, sell and profit from a literary work, computer program, drama or musical. Copyright provides legal protection for unauthorized duplication or reproduction of an original work. A copyright can be registered with the federal government, but registration is not mandatory for the protection granted.

CORPORATE CHARTER

See CHARTER; also ARTICLES OF INCORPORATION.

CORPORATE IMAGE

The perceived public vision of the type, market and quality of a company and its products or services.

CORPORATE INCOME TAX

By law, the amount paid to the federal government (and most states) by a corporation, calculated on the amount of profits (NET INCOME). Federal income taxes are required to be paid by corporations on FORM 1120.

CORPORATE INCOME TAX RETURN

The federal government FORM 1120 used for computing and reporting the amount of income taxes due to be paid by the corporation. Many states also require corporate income tax returns.

CORPORATE RESOLUTION

A summary of a specific action taken by the board of directors of a corporation as recorded in the minute book.

CORPORATE RETURN

See CORPORATE INCOME TAX RETURN. Also see RETURN ON INVESTMENT.

CORPORATE VEIL

Legal protection provided to the owners of a corporation from payment of corporate debts with personal funds; isolating personal finances from the corporate finances. Only corporate assets can be used to repay corporate debts.

CORPORATION

A legal entity, chartered by a state of the United States or by the federal government that in a business sense is separate and distinct from the persons who own it, as an artificial business person. A corporation can own property, engage in contracts, incur debts, pay taxes, sue or be sued. A corporation: has limited liability whereby owners can only lose the amount invested; can expand ownership by sale of additional shares of stock; can easily transfer ownership through the sale of shares of stock; continues to exist beyond the life of individual owners; has centralized management in a board of directors, president, secretary and treasurer. Corporations are subject to regulation in the state where incorporated and in the states where they do business. Special corporate income tax rates apply; dividends are paid to shareholders from earnings of the corporation; see DOUBLE TAXATION. In a broad sense, corporation includes all types of corporations. In a specific reference, a corporation is synonymous with C-CORPORATION. See also CLOSED CORPORATION; CLOSELY HELD CORPORATION; S-CORPORATION.

CORRESPONDENCE

Business communication by exchange of letters, faxes, and other written material, including both transmitted and received items.

CORRESPONDENCE FILE

A place for storage of CORRESPONDENCE; a collection of stored letters, faxes and other correspondence.

CORRESPONDENT

In general, a preparer or recipient of correspondence. See also CORRESPONDENT BANK.

CORRESPONDENT BANK

A financial institution that regularly performs services for another financial institution in markets inaccessible to the first financial institution. In correspondent banking, a depository relationship usually exists that compensates for expenses and facilitates transactions.

C.O.S.

See COST OF SALES.

COSIGN

To sign (a promissory note) in addition to the maker, thus becoming fully responsible for the obligation if the maker should default; to sign jointly.

COSIGNER

The person who COSIGNs a note for another, thus the cosigner must repay the obligation if the maker does not repay the note.

COST

An expenditure or the amount expended for a product or service. In marketing, the price.

COST ACCOUNTING

The process by which dollar amounts (costs) are traced directly to the project, job or unit that caused them to be incurred as expenditures.

COST BASIS

The original price (cost) of an asset, usually the purchase price. Often cost basis is commonly used to mean ADJUSTED COST BASIS, i.e., the original purchase price reduced by depreciation and increased by improvements.

COST-BENEFIT ANALYSIS

An analytical tool used to measure the results (benefits) compared to the required expenditure (cost) that may result from a decision.

COST CONTROL

The analysis of anticipated expenditures (costs) coupled with decisions (control) whether to incur or not to incur the expenditure. A knowledge of cash available is necessary to determine the ability to pay the expenditure.

COST OF CAPITAL

The expenses incurred either when acquiring money through borrowing from creditors (interest) or obtaining investment capital from owners (dividends). Sometimes also includes the administrative and selling acquisition expenses.

COST OF GOODS SOLD (COGS)

The sum of expenditures for materials and labor necessary to produce the products/services sold. Also known as DIRECT COSTS, they include the clear-cut cost factors of factory output; as opposed to INDIRECT COSTS or OVERHEAD COSTS, which are less clear-cut factors. In accounting, the beginning inventory plus purchases minus ending inventory equals the cost of goods sold.

COST OF LIVING

See CONSUMER PRICE INDEX.

COST OF LIVING INDEX

See CONSUMER PRICE INDEX.

 COST OF LIVING ADJUSTMENT (COLA)

Money added to the base wage to compensate for inflation.

COST OF SALES

Same as COST OF GOODS SOLD.

COST PER SQUARE FOOT

The average amount of expenditures by a business to maintain the building area of operation. Costs include rent, utilities, repairs, improvements and other expenses.

COST-PLUS

See COST-PLUS CONTRACT.

COST-PLUS CONTRACT

A contract agreement wherein the purchaser agrees to pay the cost of all labor and materials plus an amount for contractor overhead and profit (usually as a percentage of the labor and material cost).

COST RECOVERY

A form of deduction for DEPRECIATION of real and personal property used in a trade or business or held for the production of income; an expense on an income statement called depreciation. See DEPRECIATION.

COTTAGE INDUSTRY

The collection of small businesses that operate from homes (cottages), generally producing goods or supplies that may be offered directly for sale to the retail market.

COUNSEL

To confer with, discuss with or advise another person. Counsel is frequently used collectively for a group of counselors. In law, a lawyer or a conference with a lawyer.

COUNSELOR

One who confers with, discusses with or advises another person. In law, a LAWYER.

COUNTEROFFER

A new OFFER made in response to an offer received. This has the effect of rejecting the original offer received and placing the counteroffer on the table for consideration.

COVENANTS

Conditions placed in a loan or in a credit agreement by a lender to protect its position as a creditor of the business that is borrowing the money. In real estate, a restriction on the use or non-use of property.

COVERAGE

In insurance, the types of risks and the amount of financial protection if a loss should occur; the types and amount of financial reimbursement purchased under an INSURANCE POLICY. In business, the territory or market served by a business. In advertising, the breadth or extent of the distribution.

CPA

See CERTIFIED PUBLIC ACCOUNTANT.

CPCU

See CHARTER PROPERTY CASUALTY UNDERWRITER.

CPI

See CONSUMER PRICE INDEX.

CREDIT

In business, loans, bonds, charge-account obligations and open-account balances with other commercial firms, credit is the ability to borrow or the amount of money borrowed. In other words, one’s financial confidence or trust in another. In accounting, an entry, or the act of making an entry, in the financial books of a firm that increases a liability, owner’s equity or income, or an entry that decreases an asset or an expense. The corresponding entry appears as the DEBIT.

CREDIT ACCOUNT

An authorized ACCOUNT by a seller that permits a purchaser to take possession of the goods and remit payment at a later date.

CREDIT AND COLLECTIONS

The combined functions of lending money to and receiving money from customers; temporarily lending money to a customer for the purchase of goods or services. A CREDIT is extended at the time the goods or services are sold. The receipt of payment at a later date is called COLLECTION.

CREDIT BALANCE

In general, an accounting balance in the customer’s favor. See also CREDIT. In business, money deposited and not withdrawn from a bank account; a repayment of a debt in excess of the amount owed with an amount remaining that is due and payable to the remitter.

CREDIT CARD

A document issued to a customer of a bank establishing a credit account that allows the customer to charge purchases and make cash disbursements from the account. A credit card is different from a BANK CARD even though the credit card may be issued by a bank.

CREDIT CRUNCH

A scarcity of funds to be borrowed; a time when some businesses with good credit risk cannot borrow at any price. Short-term interest rates are unusually high.

CREDITOR

A person who owes money to another person; a LENDER. The other person is known as the DEBTOR.

CREDIT POLICY

The practice and approval process within a company for accepting or denying credit to customers.

CREDIT RATING

The ability to pay debts that have been incurred; a formal evaluation of the credit history of a person or business and its capability of repaying obligations. Several firms perform credit rating evaluations, including TRW (for private persons) and DUN & BRADSTREET (for commercial businesses).

CREDIT REPORT

A document including the detailed credit history of a person or business, used to determine credit worthiness.

CREDIT RISK

The chance that a debtor will not repay.

CREDIT SALES

Goods or services that are sold but the customer has not yet paid for them; as opposed to CASH SALES.

CRISIS MANAGEMENT

A description of a situation where little planning had been accomplished necessitating that the majority of effort is spent responding to unforeseen events. As opposed to management control with a plan of activity that anticipates the events and plans actions to be followed when the events occur.

CROSS FOOT

An accounting term meaning to add the rows across a page to the right (cross) and to add the columns down the page (foot). The sums in the right-hand column can then be added down to a total for the entire page. Likewise, the sums in the bottom row can be added across to obtain a total for the entire page. If performed correctly, the two answers will equal the same value, verifying the accuracy of the arithmetic.

CROSS-PURCHASE AGREEMENT

A type of BUY-SELL AGREEMENT whereby each shareholder agrees to buy a proportionate share of each other’s stock if the conditions of the buy-sell agreement occur.

CRUNCH NUMBERS

Performance of many mathematical calculations, such as the calculations necessary to summarize accounts and finalize totals into an income statement and a balance sheet.

CSVLI

Abbreviation for CASH SURRENDER VALUE OF LIFE INSURANCE. See CASH SURRENDER VALUE.

CUMULATIVE

The sum of subsidiary amounts over a period of time.

CURRENCY

In reference to money, usually paper money; sometimes paper money plus coins. In lending, a measure of the timeliness of debt repayment. As opposed to ARREARS.

CURRENT

Something that is happening now in business, such as current month or current contract. In financing, such as with a loan, a current loan is one that has been paid on time and is not past due.

CURRENT ASSET

Cash or other assets that are likely to be converted into cash, usually within a year, through sale, exchange or expense during the normal course of business. Examples include cash, inventory and accounts receivable. Also called LIQUID ASSET.

CURRENT ASSETS

The sum of each CURRENT ASSET as shown on a BALANCE SHEET. See also FIXED ASSETs.

CURRENT LIABILITIES

The sum of each CURRENT LIABILITY as shown on a BALANCE SHEET.

CURRENT LIABILITY

Debt, loan, trade credit or other obligation due for payment within one year.

CURRENT RATIO

Current assets divided by current liabilities; a measure of the ability of a small business to pay short-term debts from readily available funds. A high current ratio will allow safe operation of a small business whose cash flow is less dependable. Also see QUICK RATIO.

CURRENT YIELD

The RATE OF RETURN on an investment at the present time expressed as an annual percentage. Also, the annual interest on a bond divided by the market price.

CUSHION

An amount of money added to a bid for unforeseen occurrences such as delays, poor weather and bidding mistakes. This concept is also applied to a budget or an asset purchase.

CUSTOMER

The person or business that buys from a business; a purchaser of goods or services.

CUSTOMER BASE

For a business, its total list of customers, total number of potential customers or group of customers with specific classification characteristics. Such customer-base identification allows more accurate targeting of marketing objectives.

CUSTOMER PROFILE

The precise definition of the characteristics of the aggregate buyers of a specific product or service. Also, the characteristics of buyers of the entire line of products of a company.

CUSTOMHOUSE BROKER

A person or business licensed by the U.S. government to enter and clear goods through CUSTOMS.

CUSTOMS

An agency of the federal government charged with enforcing IMPORT and EXPORT regulations, and charged with collection of duties. See also CUSTOMS DUTY.

CUSTOMS DUTY

A tax, levy or fee imposed at the point of entry on goods imported into a country. Same as TARIFF; IMPORT DUTY.

 

All definitions were taken from www.small-business-dictionary.org.