D

DAILY

Those events that occur each and every day.

DAMAGES

Unsalable merchandise for which reimbursement is sought from the supplier or the transporter. In insurance, the physical and financial cost of a loss.

DATE

Usually, the exact year, month and day. A single day on which a legal contract is signed or an event occurs.

DATED, OR “AS OF”

The calendar date from which terms begin.

DATE OF INVOICE

The calendar date affixed to the INVOICE document. This date cannot be prior to shipment. The terms of the sale originate from the date of the invoice.

DAY

A single calendar day; a period of time equal to 24 hours, one seventh of a week and one 365th of a year.

DAY-TO-DAY

The events or actions that tend to occur frequently, such as each day, or that could occur on any given day.

DBA

An abbreviation for the phrase “doing business as”; used to identify a fictitious name or trade name as a business name.

DDB

See DOUBLE-DECLINING-BALANCE DEPRECIATION METHOD.

DEAL

A buy/sell transaction; a business relationship; a business opportunity; a consummated business contract; a business agreement. To perform a business transaction.

DEALER

A business that purchases goods or services for resale to consumers; a buyer or seller; a business engaged in trade. The element of inventory risk experienced by a dealer distinguishes a dealer from an agent or sales representative.

DEBENTURE

An unsecured long-term note as evidence of a debt.

DEBIT

In accounting, an entry, or the act of making an entry, in the financial books of a firm that increases an asset or an expense or an entry that decreases a liability, owner’s equity or income. The entry appears on the lefthand side of an accounting statement. The opposite of a debit is a CREDIT.

DEBIT CARD

Similar to a CREDIT CARD, but deducts the transacted amount directly from a bank account immediately at the time of the transaction.

DEBT

Debt refers to money borrowed. Money, goods or services that one party (DEBTOR) is obliged to repay to another (CREDITOR) in accordance with an expressed or implied agreement. Debt may be secured or unsecured. See also LOAN.

DEBT COVERAGE RATIO

The ratio of annual net income to annual debt service.

DEBT-EQUITY RATIO

The relationship of borrowed capital versus owned capital. The relationship of money owed by a firm to others (DEBTs) to the amount of money owed to the owners (EQUITY). The ratio serves to assess long-range financial stability.

DEBT FINANCING

The payment, in whole or in part, for a capital investment with borrowed monies. As opposed to EQUITY FINANCING by investing one’s own funds.

DEBT INSTRUMENT

A document containing a written promise to repay, such as BILL, NOTE, BOND, BANKER’S ACCEPTANCE, CERTIFICATE OF DEPOSIT or COMMERCIAL PAPER.

DEBTOR

A person or business that owes money to another; a BORROWER. The other person is know as the CREDITOR.

DEBT RATIO

A comparative analysis designed to determine the ability to incur debt. Three common measures are used: 1) total debt to total assets, 2) total debt to net worth and 3) total debt to current debt.

DEBT SCHEDULE

A list of the payments of principal and interest necessary to repay a given debt instrument or combination of debts.

DEBT SERVICE

Paying the amount owed on a debt; the amount of money required for the payment of current interest and principal on a long-term debt. Also called ANNUAL DEBT SERVICE when the term is for a total year.

DEBT-TO-EQUITY RATIO

See DEBT-EQUITY RATIO.

DEBT WARRANT

The right of a debt holder to purchase common stock at a specified price in exchange for the outstanding debt.

DECLINING-BALANCE METHOD

An ACCELERATED DEPRECIATION method of FIXED ASSET write-off that is faster than the STRAIGHT-LINE DEPRECIATION method in the early years of life on the asset.

DEDUCTIBLE

In insurance, the amount of loss borne by the owner before insurance coverage begins to compensate for the loss. In taxation, the act of taking a deduction.

DEDUCTION

An expense allowed by the IRS as a subtraction from income in computing the income that is taxable. An adjustment (subtraction) from an invoice allowed by a seller for a discrepancy or shortage.

DEED

A written document containing the transfer of or contract for property; most commonly conveying the legal title to real estate from one party to another; evidence of property ownership.

DEED OF TRUST

A legal document in which title to property is transferred to a third-party trustee as security for an obligation owed by the borrower to the lender. Most often used in real estate.

DEFAULT

The nonperformance of a duty or obligation that is part of a contract; a breach of contract. Sometimes occurs when a borrower or lessee does not remit a payment of money when due.

DEFAULT JUDGMENT

A court order in favor of the plaintiff resulting from the defendant’s failure to answer a complaint or appear in court to defend the action.

DEFENDANT

The person being sued by the plaintiff in a lawsuit; the person charged with the wrong and from whom recovery is sought.

DEFERRED

In accounting, a situation whereby a payment may be due but has been assigned for payment at a later date.

DEFINED BENEFIT PENSION

A type of PENSION in which a worker is guaranteed a specific amount of retirement income.

DEFINITION OF SMALL BUSINESS

See SMALL BUSINESS DEFINITION.

DEFLATION

A decline in prices for goods and services; the price for a product is lower as measured today than at a time in the past. Generally, the effects of deflation are opposite to those produced by INFLATION, with two differences: 1) prices of things that increase with inflation do not always decrease with deflation, such as union wage rates and 2) while inflation usually stimulates output and employment, deflation usually causes a rise in unemployment and decline in output. Deflation should not be confused with DISINFLATION, a slowing of the rate of inflation (slowing the rate at which prices are rising). See INFLATION; DIS-INFLATION.

DELIVERY

Transportation of goods by the seller to the buyer from the seller’s location to the location designated by the buyer; the legal act of transferring ownership; the exchange of a document like a contract from the preparer to the recipient.

DELIVERY INSTRUCTIONS

The document that describes the nature of a shipment and precise conditions that need to be known for transportation of the shipment.

DEMAND

An economist’s term describing the amount of a product or service people are willing to buy at each price; as opposed to SUPPLY. The aggregate desires to purchase a product or service. Also an urgent requirement or claim for financial remuneration.

DEMAND CURVE

Graphic representation of DEMAND.

DEMAND DEPOSIT

A deposit from which funds may be withdrawn on request (demand) and from which funds may be transferred to another party by means of a check.

DEMAND LOAN

A loan with no set maturity date that can be called for repayment of the amount in full when the lender chooses. Interest payments are usually required at fixed intervals. See also CALL.

DEMAND SCHEDULE

A numerical tabulation of the quantitative relationship between quantity demanded and price. See DEMAND.

DEMOGRAPHICS

Population statistics that are arranged to isolate socio-economic factors of potential customers. Demographic information that is available from most government bodies is very useful to a small business for marketing, advertising and other related matters.

DEMONSTRATE

Show by the use of samples or models to show the usability and functioning of products that are for sale.

DEMONSTRATION

The act of showing; using samples or models to show the usefulness and functioning of products that are for sale.

 DEPLETION

An accounting charge for the use of natural resources, such as oil, gas or timber. Similar to DEPRECIATION of real property.

DEPOSIT

Cash, checks or drafts placed with a financial institution, such as a bank, for credit to a customer’s account. Banks differentiate between, a DEMAND DEPOSIT, such as a checking account, which can be withdrawn at any time; and a TIME DEPOSIT, such as a CERTIFICATE OF DEPOSIT, which has a specified maturity date when cash can be withdrawn. Money paid initially by a purchaser as part payment on a contract as evidence of intention to complete the contract and protect the seller in the event the contract is not completed. Also called EARNEST MONEY. Sums paid as security to protect the selling party for services delivered, but not paid, such as utilities or rentals.

DEPOSIT IN TRANSIT

A DEPOSIT that has been made ready for the bank or has been mailed to the bank, but has not yet been entered in the bank records for the business account.

DEPOSIT SLIP

A record of a DEPOSIT transaction with a financial institution, such as a bank.

DEPRECIATE

See DEPRECIATION.

DEPRECIATED BASIS

See ADJUSTED BASIS; BASIS.

DEPRECIATION

An accounting term for the cost recovery of REAL PROPERTY and PERSONAL PROPERTY; the EXPENSE deduction on an INCOME STATEMENT allowing for gradual wearout of a FIXED ASSET; AMORTIZATION of a fixed asset. The duration of the depreciation period approximates the useful life of the asset. Commonly used methods of depreciation include STRAIGHT-LINE DEPRECIATION; ACCELERATED DEPRECIATION; ACCELERATED COST RECOVERY SYSTEM; DECLINING-BALANCE METHOD; SUM-OF-THE-YEARS-DIGITS METHOD.

DEPRECIATION EXPENSE

The amount of cost recovery of a fixed asset that is entered as a subtraction (an expense) on an INCOME STATEMENT.

DEPRECIATION LIFE

An approximation of the useful life (in years) of an asset used for calculation of depreciation amounts to be applied as an expense to an income statement. See DEPRECIATION.

DEPRECIATION RECORD

The document that describes the method, DEPRECIATION LIFE, and amount of depreciation. See DEPRECIATION.

 DEPRECIATION SCHEDULE

A document displaying the period-by-period amount of DEPRECIATION to be entered in the income statement worksheets. See DEPRECIATION.

DESK

The article of office furniture used for performing various business related tasks.

DESKTOP PUBLISHING

Method of producing publications and advertising materials within a small business office by means of a personal computer with special software, as opposed to hiring layout and printing professionals.

DESTINATION CONTROL STATEMENT

In exporting, the destination statement that is displayed on the outside of an export shipment, as required by the U.S. government.

DILUTED EARNINGS

A situation whereby additional shares of stock were sold to other investors causing the earnings to be spread over a broader base. Thus fewer earnings are available for each share unless earnings grow proportionately more than the number of new shares issued.

DIRECT COST

An EXPENSE (cost) that is incurred only because of a specific contract, job or project being accomplished. Without that specific contract, the expense would not normally be incurred. In cost accounting direct costs are usually tabulated according to the specific jobs to evaluate profitability. As opposed to INDIRECT COST.

DIRECT LABOR

Personnel assigned to the production process whose payroll expenditures are easily traced to the units of output and are included in the COST OF GOODS SOLD. As opposed to INDIRECT LABOR, or supporting personnel.

DIRECT LOAN

Money borrowed directly from the federal government. Special conditions apply.

 DIRECT MAIL

Marketing goods directly to the consumer through the mail as opposed to marketing through a retail store.

DIRECT MARKETING

Sale of products by a producer to customers by the use of mail rather than middlemen such as wholesalers and retailers. Also commonly used for business-to-business sales.

DIRECT MATERIALS

Raw materials and other purchases that become a part of the units produced and incur expenditures that are easily traced to the units of output and included in the COST OF GOODS SOLD. As opposed to INDIRECT MATERIALS, such as office supplies.

DIRECT METHOD MARKET ENTRY

A form of exporting whereby the exporter retains responsibility for shipping the product but may or may not retain responsibility for sales, regulations, marketing and final distribution.

DIRECTOR

A member of the BOARD OF DIRECTORS. Also a title for one who directs; one who controls the operation of a business. See BOARD OF DIRECTORS.

DIRECT TAX

A tax levied on income, such as INCOME TAX. The opposite of INDIRECT TAX.

DISABILITY

A physical condition of a person that prevents the person from performing certain normal functions required for work. Under the Americans with Disabilities Act (ADA) employers must not discriminate against disabled persons. Businesses must provide reasonable accommodations in the workplace for disabled workers and customers.

DISABILITY CLAUSE

The portion of an insurance policy (the clause) entitling a policyholder who becomes permanently disabled to cease premium payments yet still retain insurance coverage under the policy.

DISADVANTAGED

A person who has a disability or is economically depressed due to race, color, sex, etc. A business owned by such a person is called a SMALL DISADVANTAGED BUSINESS.

DISADVANTAGED BUSINESS

See SMALL DISADVANTAGED BUSINESS.

DISASTER LOAN

Physical or financial assistance by a government to individuals and businesses that have suffered losses due to natural disaster.

DISBURSEMENT

Money paid out or expended in the discharge of a debt, as in an accounting process, distinguished from a distribution from earnings. Examples include a draw on a construction loan, advances on salary, discharge of a debt payment and payment of an invoice.

DISCLOSURE STATEMENT

A complete report of information about a loan, provided by a lender to a borrower, such as interest rate, fees and charges. Required by the Truth-in-Lending Law. Also a full explanation of the facts about a situation. Also, a complete listing of the facts, warranties, dangers, hazards, problems or truths. for manufactured products, services performed, real estate transacted or other transaction.

DISCOUNT

The amount by which the current amount is less than the original amount; the difference between the face value and the cash value; a percentage off; the current amount is a percentage less than the original amount. In retail merchandise sales, a discount is the percentage off the original selling price in exchange for quick payment. In discount financing of a loan, the interest is deducted in advance.

DISCOUNTED CASH FLOW

The PRESENT VALUE of a future income stream where each cash payment is reduced by a DISCOUNT (INTEREST) amount at a DISCOUNT RATE. The measure weighs dollars received early with more value than those dollars received later. Two common methods are INTERNAL RATE OF RETURN and NET PRESENT VALUE. Also known as PRESENT VALUE ANALYSIS.

DISCOUNT FACTORING

A method of financing (FACTORING) wherein accounts receivable are exchanged for cash and the cash is received prior to the average maturity date of the accounts. The amount of cash received is determined by face value of the receivables less cash discounts, an allowance for estimated claims, returns and carries an interest rate typically two percent to three percent above the bank prime rate based on daily balances. See FACTORING.

DISCOUNTING

In marketing, selling at a lower price than the usual price or the price previously offered.

DISCOUNT POINT

A loan fee that is charged by a lender and is paid up-front in order to make a lower interest rate on the loan. The fee usually covers the administrative cost of making the loan. One discount point is equal to one percent of the loan amount.

DISCOUNT RATE

The INTEREST RATE used to calculate the PRESENT VALUE of a future cash flow stream. Also see NET PRESENT VALUE; CAPITALIZATION RATE. In banking, the interest rate charged by the Federal Reserve to member banks for loans made to the banks. This rate provides a floor for establishing the interest rate banks charge to customers.

DISCRETIONARY FUNDS

Money available for investment; money in excess of that required for basic needs; money for unbudgeted items. Money that has no predetermined need at the time it is identified; a decision later will determine the use of the money spent.

DISCRIMINATION

The act of unfavorably treating a particular group or class of people; failure to treat all people equally.

DISINFLATION

A decrease in the rate of inflation (slowing the rate at which prices are rising). Disinflation is often seen in a recession when sales drop and retailers are not always able to pass the higher prices to consumers. See DEFLATION.

DISPLAY

To show a product that is for sale. In an overall sense, a selection and arrangement of products for sale that can be viewed by the public.

DISTRIBUTION

That part of the marketing function involved with getting the product from the factory to the customer.

DIVESTITURE

Required sale of some assets of a company.

DIVIDEND

A proportionate payment of earnings to shareholders for each share of stock in money or equivalent as declared by the Board of Directors.

DIVIDEND CHECK

The money payment of a DIVIDEND in the form of a check.

DIVIDEND YIELD

The annual DIVIDEND paid on a share of stock divided by the price paid for the share.

DIVISION

A grouping of departments in a large business, usually organized along product or functional lines. The act of separating into two or more parts.

DOCK RECEIPT

In exporting, the document (RECEIPT) from the seller or seller’s agent at the point of shipment that acknowledges receipt of goods by the transportation company.

DOCUMENT

Paperwork in general, usually with an official significance such as contracts, conveyances and other legal instruments.

DOCUMENTARY DRAFT

A DRAFT to which the appropriate documents are attached, such as title to goods.

DOCUMENTARY LETTER OF CREDIT

A LETTER OF CREDIT for which the issuing bank stipulated that certain documents must accompany the draft.

DOME LEDGER

Standardized forms of bookkeeping that provide a ready-made system for recording transactions.

DOMESTIC

Having to do with the home or housekeeping; of a house or family. Sometimes a shortened form of DOMESTIC EMPLOYEE.

DOMESTIC EMPLOYEE

A person who is hired to perform work or services in the home or for a family, i.e., house cleaning, care for a child or drive a car to run errands. A servant, maid or cook.

DOUBLE-DECLINING-BALANCE DEPRECIATION METHOD (DDB)

One of the methods of ACCELERATED DEPRECIATION permitting twice the annual depreciation write-off as the STRAIGHT-LINE METHOD.

DOUBLE-ENTRY

A system of keeping ACCOUNTING records (BOOKKEEPING) in which every transaction is listed twice (once for source of the transaction and once for disposition). The entries are called DEBIT and CREDIT. This method provides assurance of accuracy and conformity with the underlying accounting equation: ASSETS equal LIABILITIES plus EQUITY.

DOUBLE-ENTRY ACCOUNTING

See DOUBLE-ENTRY.

DOUBLE INDEMNITY

An insurance policy rider that pays double the amount of the face amount of the policy under specific conditions, such as death.

DOUBLE TAXATION

Effect of law whereby dividends are taxed as earnings to a corporation and then taxed again as personal income to the owner (shareholder) when distributed as dividends.

DOWN PAYMENT

The amount of cash paid by a purchaser of a FIXED ASSET at the time of purchase. Down payment includes EARNEST MONEY (a good-faith intention to complete the purchase) previously paid. The terms are not synonymous.

DOWNSIDE RISK

A “worst case” situation of the gradation of risk in which an investor will lose money in a business venture if the venture fails.

DOWNSTREAM

The direction of goods from the producer toward the consumer; the flow of funds from the originator toward the user. The opposite of UPSTREAM.

DO YOUR HOMEWORK

See HOMEWORK.

DRAFT

A signed, unconditional written order prepared by one party (DRAWER) who instructs another party (DRAWEE) to pay a specified sum to a third party (PAYEE). Payee and drawer are often the same party. A draft is called a BILL OF EXCHANGE in foreign transactions. A CLEAN DRAFT is without supporting papers. A DOCUMENTARY DRAFT includes papers or documents attached. A SIGHT DRAFT is payable on demand. A TIME DRAFT is payable either on a definite date or at a fixed time after sight or demand. Also to prepare a preliminary document, such as a contract.

DRAFT ON FOREIGN BUYER

An exporter may receive payment by presenting a check written against the buyer’s account. The bank will agree to pay the value when it matures or to forward it to the buyer’s foreign bank to hold until payment by the buyer.

DRAW

An advance payment of money, such as partial payment (similar to salary) made to a partner from a partnership in anticipation of earnings at the end of the period, or payment to a commissioned salesman in anticipation of the consummation of a sale.

DRAWDOWN

The amount actually borrowed from a total amount available for borrowing, i.e., from a LINE-OF CREDIT.

DRAWEE

See DRAFT.

DRAWER

See DRAFT.

DRAW MONEY

See DRAW.

DROP DEAD DATE

The final date when the option being considered is no longer available.

DROPSHIP

Delivery of a product or service to a location other than the ordering location.

DUAL PRICING

Selling identical products in different markets for different prices. May be unethical or illegal. In exporting, often a reflection of export subsidies or dumping.

DUAL-SOURCING

Having two suppliers for the same product or service to ensure a continuous supply at a favorable price.

DUE BILL

A document stating a debtors’ obligation to a creditor. See also BILL; INVOICE.

DUE DATE

The calendar date agreed upon or planned for an occurrence, like payment on the first of each month.

DUMPING

In international trade, a practice wherein the price of an exported product is less than the cost to produce the product. Dumping is often employed by a country to lock up a market and gain a future monopoly for the product.

DUPLICATE

An exact copy; the process of making an exact copy; to reproduce a copy of a document.

DURABLE POWER OF ATTORNEY

A POWER OF ATTORNEY that goes beyond the death of the person who signed the power, giving certain power to another person.

DUTY

In general, an obligation to perform an act. In international trade, a TARIFF on imported goods. See TARIFF; CUSTOMS DUTY.

 

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