P

PAID-IN CAPITAL

Same as CAPITAL INVESTMENT, but excluding more precise components as defined in CAPITAL SURPLUS.

PAID IN FULL

Receipt of the entire amount that was on an invoice; total payment for the work completed; a loan or debt that has no outstanding balance.

PAID-IN-SURPLUS

See CAPITAL SURPLUS.

PAID INVOICE

A bill showing goods and services sold by a seller on which is marked “paid,” showing evidence by the seller that the buyer has remitted the total amount due at the time of purchase or in advance of purchase.

PAPER

A business term that describes forms of money other than cash, such as mortgage, note, stock, bond or consumer loan. These other forms are often held as security for a collateralized loan. In general, the sheets of material that are used for transmitting printed material.

PAPER PROFIT

The illusion that a profit may exist by performing calculations without evidence that the transactions occurred or proof that the profit, in fact, does exist.

PAPERWORK

The recordkeeping chores of maintaining a business. Paperwork is literally the work associated with documenting business activities on paper for later recall.

PAR

The nominal or face value of a security such as a stock or bond as stated in equivalent dollars. For COMMON STOCK or PREFERRED STOCK, the par value is stated in the ARTICLES OF INCORPORATION. In a NEW ISSUE of stock, the sale is at par, and the proceeds of the sale are recorded as EQUITY in the books of the corporation.

PARENT COMPANY

A firm that owns or controls another company, as a subsidiary, through the ownership of voting stock. The company that owns a subsidiary is the parent company.

PARKINSON’S LAW

“Work expands to fill the time available for its completion.”

PARTNER

A person participating in a PARTNERSHIP.

PARTNERSHIP

The Uniform Partnership Act that is in force in most states defines a partnership as “an association of two or more persons who carry on a business for profit as co-owners.” A partnership can hold title to real property in the name of the partnership, holding by tenancy in partnership. One tax advantage of this form of ownership is that the partnership itself does not pay taxes. However, the partnership must file a partnership information return (Form 1065) showing how much income the partnership distributes to each partner (Schedule K-1). Then each partner is responsible for paying his or her own tax. See also GENERAL PARTNERSHIP; LIMITED PARTNERSHIP; JOINT VENTURE.

PARTNERSHIP AGREEMENT

The document that defines the conditions and limitations of the PARTNERS in a PARTNERSHIP business.

PARTNERSHIP INFORMATIONAL RETURN

See PARTNERSHIP RETURN.

PARTNERSHIP RETURN

The informational federal government document (FORM 1165) used to show the income (or loss) of a partnership. See PARTNERSHIP.

PARTNERSHIP TAX

Partnerships are not taxed as such, therefore, no partnership tax is due. Yet the term partnership tax is sometimes used to refer to the income tax due by an individual, attributed to a proportionate share of partnership income (reported to the individual on federal FORM K-1) that causes an individual income tax as a result of participation in a partnership. See INFORMATIONAL RETURN.

PAR VALUE

See PAR.

PASS

See PROCUREMENT AUTOMATED SOURCE SYSTEM.

PASSIVE INVESTOR

A person who provides equity (an investor) for a business but does not participate in the active operation of the business; the opposite of an active owner/manager. In taxing, an IRS classification of income such as real estate in which investors often are not participants in the management of the business.

PAST DUE

Later than agreed; not on time; untimely. Past due usually refers to a payment that has not been made on time.

PAST DUE ACCOUNT

An account that has a payment that was not received by the scheduled date.

PATENT

In business, a privilege (certificate) issued by the federal government (or foreign country) that grants exclusive rights (monopoly) to production, sale and profit from the invention of a product for a specific period of time and the right to prevent others from copying the invention. The legal document authorizing exclusive property rights to the inventor of a product or process.

PAY

To give money in exchange for a product or service received; to discharge a debt, obligation or expense by giving money in exchange; wages or salary.

PAYABLE

An amount to be paid. Payables are a list of amounts currently due to be paid. See ACCOUNTS PAYABLE.

PAYABLES

An amount to be paid. Payables are a list of amounts currently due to be paid. See ACCOUNTS PAYABLE.

PAYBACK PERIOD

The length of time required before the original cash investment is recovered.

PAYEE

The person to whom a debt instrument, such as a check or promissory note, is made payable; the receiver. See MAKER.

PAYMENT

An amount paid; something that is paid.

PAYMENT AND PERFORMANCE BOND

A bond by a surety that provides the protection of both a PERFORMANCE BOND and a PAYMENT BOND.

PAYMENT BOND

A surety bond by which a contractor assures an owner that all labor and material will be fully paid and that no mechanic’s liens will be filed. The bond also assures suppliers and subcontractors they will be paid by the prime contractor.

PAYMENT FLOAT

The period of time between incurring a debt (obtaining credit on a purchase) and disbursement of the money to repay the debt. For a business, it is prudent to extend this period to the maximum without incurring an interest charge. Both internal and external factors affect the float period. Internal factors (which are controllable by the firm) include the speed with which the firm makes payments on vendor invoices. External factors include the grace period, speed of collection by the vendor, as well as the processing time for checks to clear the bank. See FLOAT.

PAYMENT IN FULL

Repayment of the entire amount owed; satisfaction of a financial obligation.

PAYMENT ON DEMAND

An order to comply with an obligation. Often, a contract will include a “payment on demand” clause, which means the debtor must pay the balance when asked, even if the terms of the contract agreement have been met.

PAYOFF

The payment in full of an existing loan. Often payoff means paid in full before the due date. A bribe, a gratuity or a gift.

PAYROLL JOURNAL

The accounting document that records the wages, salaries, hours worked and deductions for each employee.

PAYROLL

The list of employees in a company, i.e., the employees who are paid by the company. When a person is employed by a company, that person may say he or she is on the payroll.

PAYROLL RECORD

Complete information concerning wages and salaries paid.

PAYROLL TAX

A TAX paid from wages or salaries by WITHHOLDING.

PC

See PERSONAL COMPUTER.

P.C.

See PROFESSIONAL CORPORATION. P/E See PRICE/EARNINGS RATIO.

PENSION

A payment made to a former employee or to his family after fulfillment of conditions of service with the company, such as age or years of service; payment to an employee after the employee has retired. See RETIREMENT.

PENSION PLAN

The document of a company that describes the requirements, obligations and benefits of the pension program offered by the company.

PERCENTAGE OF COMPLETION METHOD

A procedure for computing partial payments on a large contract wherein identifiable portions of the work may be satisfactorily completed, invoiced and paid before the entire project is completed and paid in full.

PERCENT PROFIT

Percent profit can have several definitions depending on the context used, but most commonly refers to RETURN ON SALES. See RETURN ON SALES; RETURN ON INVESTED CAPITAL.

PER DIEM

An amount paid for each day, or part of a day, usually for travel expenses such as meals and lodging.

PERFECT COMPETITION

A market condition where no buyer or seller has the economic power to alter the market price of a good or service; characterized by a large number of buyers, a large number of sellers, all selling similar products or services, an equal awareness of prices and volume, an absence of discrimination in buying or selling, total mobility of productive resources and complete freedom of entry into the market. As opposed to MONOPOLY; OLIGOPOLY. Also called PURE COMPETITION.

PERFORMANCE BOND

A type of insurance, purchased by a business that will ensure accomplishment of the work for a customer in accordance with the contract. The bond usually provides that if the contractor fails to complete the contract, the surety itself can complete the contract. The insurance company providing performance bonds is called a surety company or simply a SURETY.

PERK

A privilege or benefit, often monetary or property, given to a person by a business, usually to the owners or executives.

PERMIT

An authorization to perform a task, most often by a governmental entity, i.e., a construction permit. See BUILDING PERMIT.

PERSON

A human being; an individual. As opposed to a business, company or firm such as a proprietorship.

PERSONAL

Relating to a particular person; private.

PERSONAL ACCOUNT

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

PERSONAL CHECK

A CHECK prepared by a person that is used as a substitute for money. See CHECK.

PERSONAL COMPUTER

An electronic device with a keyboard, computing capacity, screen and printer, used by an individual in an office environment to perform work.

PERSONAL EXPENSES

The amounts paid by a person for maintaining the accustomed standard of living for the immediate family.

PERSONAL FINANCIAL STATEMENT

A BALANCE SHEET and an INCOME STATEMENT for a person identifying assets, liabilities, net worth, income and expenses. Used to substantiate the person’s financial solvency, often part of a loan application for a start-up business. See Self-Help Guide C.

PERSONAL FUNDS

Cash and other assets that can be identified separately from the business funds. Often used in context of a START-UP business to identify money contributed by the person, as opposed to other investors.

PERSONAL INCOME TAX

Tax paid to a government (federal, state or local) as a percentage of the amount of wages earned and other income.

PERSONAL INJURY INSURANCE

Coverage by an insurance company for a physical harm to an individual person.

PERSONAL LIABILITY

The obligation of a person to satisfy a business debt to the extent of one’s personal assets. Shareholders in a corporation are usually protected against personal liability for the debts of the corporation, unless personal assets have been pledged as security. Avoiding personal liability is one of the advantages of the corporation as a form of legal structure for a small business.

PERSONAL LOAN

A LOAN made to a person, as opposed to a commercial loan made to a business. See also COMMERCIAL LOAN.

PERSONAL NET WORTH

See NET WORTH.

PERSONAL PROPERTY

Things (PROPERTY) that are tangible, but movable; as opposed to REAL PROPERTY, which is tangible but not movable. In accounting, personal property is an asset on a balance sheet like equipment, machinery, automobiles, furniture and office supplies. See also PROPERTY; REAL PROPERTY.

PERSONAL PROPERTY TAX

By law, a payment made to a government (usually state or local) and calculated as a percent of the worth of the personal property asset.

PERSONAL SECURITY

A promise by one person to pay the debt of another person; to COSIGN.

PERSONAL USE

Expenditure of money or use of property by a person for private (not business) gain. Differentiation from BUSINESS USE is important because the uses are taxed differently.

PERSONNEL

The people resources of a business. Sometimes, the staff function that is responsible for the people interests in a business.

PETTY CASH

Amounts of money (paper money and coins) kept on the business premises for payment of small incidental expenses.

PETTY CASH FUND

The cash money kept on the business premises for small expenditures.

PETTY CASH VOUCHER

A document for obtaining money from the PETTY CASH FUND and a record of disbursements made from the fund.

PIERCE THE CORPORATE VEIL

Legal jargon applied to the exposure of corporate owners under some conditions whereby creditors can attach personal assets to recover corporate debts. This may occur when the affairs of the corporation are conducted as if no corporation existed. In particular, stockholders can be held liable for corporate acts, such as crime, fraud or to defeat public convenience.

PIGGYBACK

A method of shipping whereby truck trailers are loaded on board a train car for transportation rather than by over-the-road hauling.

PIGGYBACK ARRANGEMENT

A method of distribution whereby a company is able to use the already established distribution channel of another company. This method is particularly effective when the two companies are selling complementary products.

PLAINTIFF

The person who commences a lawsuit; the complainant. PLAN A scheme or method (formulated beforehand) for making, doing, accomplishing or arranging something for a business, such as a project, product or schedule; a method of proceeding; a written document describing what and how something will be accomplished for a business.

PLANNING

The making of a PLAN for the business; a method for doing, accomplishing or arranging business; having in mind a project or purpose for a business.

PLANS

The documents that describe “how” something is to be accomplished; a design; a drawing. Examples include: business plan, engineering plan and marketing plan.

PLANS AND SPECIFICATIONS

The documents that completely describe the physical and functional definition of a product or service to be performed; what and how the job or project is to be done.

PLANT

An asset consisting of land, buildings, machinery, natural resources and furniture used for the manufacture of goods; a FACTORY. In a limited sense, plant is used for only the land and buildings or for description of all fixed assets.

PLEDGE

The transfer or delivery of property to a lender to be held as security for repayment of a debt. A legal promise that the property title can be transferred to the lender if the debt is not repaid.

PLP

See PREFERRED LENDER PROGRAM.

POINTS

In lending, a generic term for interest rate percentage or fraction thereof, depending on usage.

POLICY

Short for an INSURANCE POLICY. See INSURANCE POLICY. Wise, prudent or visionary guidance from the very top level of an organization, setting the general direction, as opposed to a law or rule that has distinct limits; a plan or course of action to be pursued by the business.

POLICYHOLDER

The INSURED.

POOL

In business finance, a concept of gathering monies from several sources for a single use; to pool the money. See more specific uses of the term pool used in various aspects of business, such as: INDUSTRY POOL; INSURANCE POOL; INVESTMENT POOL.

PORTFOLIO INVESTMENT

An investment of capital by an individual or another company that has no interest in management or operational participation in the business. The investment is made in order to obtain a financial reward, rather than to gain management control.

POSITIVE CASH FLOW

See CASH FLOW.

POST

In accounting, to transfer financial data from an original document to an account in the books of account, usually in chronological order. Also to transfer from the JOURNAL to the LEDGER ACCOUNTS. Also, to display a document or product in public view.

POWER OF ATTORNEY

A written document that authorizes one person to act for another person who has signed the document. The document must be witnessed by a NOTARY PUBLIC or other public official. The power may bestow total authority, as a FULL POWER OF ATTORNEY, or may be restricted to specific actions, as a LIMITED POWER OF ATTORNEY, or may transcend the death of the signer, as a DURABLE POWER OF ATTORNEY.

PPI

See PRODUCER PRICE INDEX.

PR

See PUBLIC RELATIONS.

PREEMPTIVE RIGHT

The opportunity given to existing shareholders to purchase shares of a NEW ISSUE before it is offered to the public.

PREFERRED LENDER

A bank approved by the U.S. Small Business Administration for making GUARANTEED LOANS under the PREFERRED LENDER PROGRAM (PLP).

PREFERRED LENDER PROGRAM (PLP)

A U.S. Small Business Administration program whereby banks are pre-approved to make U.S. Government GUARANTEED LOANS before submittal of the applications to the U.S. Small Business Administration for approval. However, the SBA reserves the right to disapprove the application, whereby the loan then becomes a commercial loan by the bank, usually without advising the borrower. Also see CERTIFIED LENDER PROGRAM (CLP).

PREFERRED STOCK

Shares of stock that identify ownership in a corporation but generally without voting rights. Preferred stock has prior claim on dividends, earnings and assets before common stock’s claim. The dividend paid on preferred stock is usually a pre-determined amount, similar to interest. See STOCK.

PRELIMINARY COST

Expenses incurred in conjunction with, but prior to, actual commencement of a main project. Examples include legal investigations, insurance and financing commitments.

PREMIUM

The up-front consideration necessary to secure a loan, lease or contract. In insurance, the amount paid for insurance coverage. UNEARNED PREMIUM is that portion of premium already paid that must be returned to the insured upon cancellation of the policy.

PREPAID

A remittance before the due date; paid in advance of the due date. See PREPAY.

PREPAID EXPENSES

An entry shown on a BALANCE SHEET that accounts for an amount of money that could be recovered by cancellation of the payment made.

PREPAID INTEREST

An amount of interest expense paid before it is due. For taxing purposes, usually interest must be deducted over the life of the loan; interest cannot be deducted as a tax avoidance expense.

PREPAY

To pay in advance; to pay before the due date.

PREPAYMENT PENALTY

An extra charge required if a loan is paid in full before the due date. Sometimes a penalty may apply to a partial payment made before the due date for the partial payment.

PREPAYMENT PRIVILEGE

A provision in a NOTE that permits payment of money toward the principal before that amount is due, including pay-off of the entire principal balance due.

PRESENT VALUE

The value today of a future payment, reduced by the interest that could be earned at an appropriate COMPOUND INTEREST RATE. That is, the present worth is equal to the future worth (FUTURE VALUE) less the amount of interest that could have been earned. Also applies to a stream of future payments with the interest amount calculated for each payment. See also FUTURE VALUE; INTERNAL RATE OF RETURN; DISCOUNTED CASH FLOW; TIME VALUE OF MONEY; INWOOD TABLE.

PRESENT VALUE ANALYSIS

See DISCOUNTED CASH FLOW.

PRESENT VALUE OF ONE DOLLAR

See the TIME VALUE OF MONEY.

PRESIDENT

The top level EXECUTIVE in a company; usually, in a small company, all day-to-day operations are directed by the president. The corporate position reporting to the BOARD OF DIRECTORS.

PREVAILING RATE

A general term that describes the average interest rate existing in the current market for similar debt instruments.

PREVAILING WAGE

The generally accepted amount being paid for a particular skill of worker. Sometimes a wage rate guaranteed by law. Also called prevailing wage rate.

PRICE

The amount of money being charged for a product or service; the amount asked or paid.

PRICE CHANGE

Lowering or raising a price from its former value, to deal with competitive market pressures to gain an advantageous market position.

PRICE CUTTING

Lowering the price of products or services because of competitive forces in the marketplace.

PRICE DISCRIMINATION

Selling the same good or service at different prices to different buyers, usually an unlawful practice.

PRICE/EARNINGS RATIO (P/E)

The market price of a share of common stock divided by the EARNINGS PER SHARE.

PRICE ELASTICITY

In economics, the extent to which a change in price will cause a change in demand. When prices are inelastic, consumers will continue to buy the same amount regardless of an increase or decrease in prices. On the other hand, when prices are elastic, rising prices will cause a drop in demand; conversely, lowering prices will cause increased demand.

PRICE FIXING

An illegal practice wherein individual companies agree to set prices at a given level, usually higher than a competitive market would sustain. See ANTITRUST.

PRICE LEADER

The company that usually is first to announce price increases in an industry.

PRICING STRATEGY

The theory and practice of evaluating market potential to establish the optimum price of goods and services that results in the greatest profit.

PRIMARY COMMODITIES

Raw materials; commodities in the unprocessed state, such as iron ore and grain.

PRIME

See PRIME RATE. Also short for PRIME CONTRACTOR.

PRIME CONTRACTOR

The CONTRACTOR totally responsible for a project for a customer. Often a prime contractor will employ the services of subcontractors who perform specific portions of the work.

PRIME RATE

The interest rate at which banks will lend to their most creditworthy customers. The prime rate is the standard across the banking industry since less creditworthy customers receive a rate that is tied to prime; usually a higher rate.

PRINCIPAL

In general, the owner of a privately held business or the major party, buyer or seller in a transaction. In finance, the basic amount invested in a security, exclusive of earnings or interest. A deposit on which interest is either earned or owed. The face amount of a debt instrument. The balance of an obligation, separate from interest.

PRIVATE CORPORATION

See CLOSED CORPORATION.

PRIVATELY HELD CORPORATION

See CLOSED CORPORATION.

PRO BONO

Work, usually by professionals such as lawyers and accountants, which is performed free or at a reduced rate for the public good.

PROCUREMENT

The act of purchasing or of buying.

PROCUREMENT ASSISTANCE

A kind of contract from a government, offering special contract opportunities to qualifying businesses. There are two types of particular interest to small businesses: 1) small business set-aside, whereby the law requires contracts to be awarded to small businesses; and 2) contracts specifically for small and minority-owned businesses, called the SBA 8(a) PROGRAM.

PROCUREMENT AUTOMATED SOURCE SYSTEM (PASS)

A computerized listing of small businesses compiled by the SBA, used as a resource for federal procurement centers and prime contractors.

PRODUCER

A manufacturer; a person or company that works to produce goods (new products) from raw materials and articles purchased from others. As opposed to WHOLESALER, RETAILER or CONSUMER.

PRODUCER PRICE INDEX (PPI)

A measure of change in wholesale prices; revised monthly by the U.S. Bureau of Labor Statistics. Prices are calculated as products move from manufacturing through the distribution stage, before reaching the consumer. The equivalent for consumer goods is the CONSUMER PRICE INDEX.

PRODUCT

Physical things that are bought and sold by businesses; GOODS. Often the physical object resulting from manufacturing operations. Something produced for sale by human effort as raw material is transformed into a more useful form of physical object. A physical thing available for sale; as opposed to sale of SERVICE. See GOODS; MERCHANDISE.

PRODUCT BRAND MANAGEMENT

The development and implementation of a market strategy for a particular product with a BRAND NAME.

PRODUCT DEVELOPMENT

The act of performing research or creative effort to introduce a new product to the marketplace. Devising something new that performs better or costs less than existing products; inventing for practical use.

PRODUCT FACTORS

Important characteristics that influence demand for a product, whether the products are goods or services.

PRODUCTION

The creation of economic value, particularly goods and services for sale to others; to manufacture a product.

PRODUCTION RATE

The number of units manufactured in a given period of time or the time required to produce a single article.

PRODUCTIVITY

A measure of efficiency that relates output to input in a way that provides data for evaluating areas for improvement.

PRODUCT LIABILITY

The responsibility of a manufacturer to a purchaser for reimbursement of loss resulting from using or employing the product.

PRODUCT LIFE CYCLE

The time a product is in existence from start-up to close out, often divided into its constituent phases such as start-up, development, growth, maturity, decline and close out.

PRODUCT MIX

The array of products offered for sale by a company where each product fills a specific customer need.

PRODUCT-ORIENTED BUSINESS

A company whose primary function is to sell GOODS and MERCHANDISE to customers; as opposed to a SERVICE-ORIENTED BUSINESS.

PRODUCTS

The plural of PRODUCT; goods; merchandise.

PRODUCT STANDARDS

Specifications by the manufacturing company or regulations by a government that require minimum levels of quality, health, safety, performance or other characteristics of a product or service.

PROFESSION

An occupation, as a business, requiring advanced education and training principally involving high standards of intellectual skills, such as accounting, law and engineering. Also, a body of persons in any such occupation.

PROFESSIONAL

A person who earns a living in an occupation involving high standards of intellectual knowledge, after the person has successfully completed the required education and training. Practicing a profession. See PROFESSION.

PROFESSIONAL CORPORATION (P.C.)

A legal identification (FICTITIOUS NAME) of a company engaged in providing PROFESSIONAL services, in areas like the law and accounting. Usually abbreviated P.C. following a person’s name.

PROFESSIONAL ORGANIZATION

A group of professional business people and companies that join together to promote their common interests. See PROFESSION.

PROFIT

In a financial situation, a positive sum after expenses are deducted from income of a business as shown on an income statement; the monetary gain obtained from the use of CAPITAL in a transaction; the proceeds from property or investment; the opposite of a LOSS. See EARNINGS.

PROFITABLE

A profit was earned; the ability to earn a profit. See PROFIT.

PROFITABILITY

A profit was earned; the ability to earn a profit. See PROFIT.

PROFIT MARGIN

The relation of various levels of profit to net sales, most often as a percent of sales. GROSS MARGIN: From gross sales, subtract returns and allowances to arrive at net sales; from net sales, subtract cost of goods sold to arrive at gross profit. Divide gross profit by net sales and express as a percent to obtain gross margin. NET MARGIN: From gross profit, deduct operating expenses (overhead) to determine net profit before taxes. Divide net profit before taxes by net sales and express as a percent to obtain net margin. Both gross margin and net margin, when compared with prior periods and with industry statistics, provide a measure of operating efficiency, pricing policy and ability to compete successfully with other companies in the field.

PROFIT OBJECTIVE

The amount of earnings (profit) expected from a product or service; the desired profit.

PROFIT PATTERN

The trend in an ability to earn; the unique characteristics that produce earnings in a particular situation.

PROFIT POTENTIAL

The likelihood that a venture will earn a profit, as opposed to a loss.

PROFIT SHARING

An agreement between a company and one or more employees wherein a portion of the company profits are paid proportionately to the employees.

PROFIT-SHARING PLAN

An agreement between a company and one or more employees wherein a portion of the company profits are paid proportionately to the employees.

PRO FORMA

A projection of what may result in the future from actions in the present. In accounting, a BALANCE SHEET or INCOME STATEMENT for a future time, where amounts are based on assumptions of future hypothetical events. As opposed to a balance sheet or an income statement, which summarizes financial transactions that have already occurred. Most often an accountant may simply refer to “pro forma,” meaning a PRO FORMA BALANCE SHEET. PROJECTED INCOME STATEMENT is used more often than pro forma income statement. Pro forma is derived from the Latin, meaning “in the form of” a balance sheet or income statement.

PRO FORMA BALANCE SHEET

See PRO FORMA. See also Self-Help Guide F.

PRO FORMA INCOME STATEMENT

Same as PROJECTED INCOME STATEMENT; See Self-Help Guide H. See also PRO FORMA.

PROGRESS BILLING

An invoice to receive a PROGRESS PAYMENT.

PROGRESS PAYMENT

Payments of money for partial completion of portions of a project. PROGRESS BILLING is made, as provided in the contract, for work that has been satisfactorily completed. Progress payments are remitted for the completed work.

PROJECTED INCOME STATEMENT

An approximation of INCOME, EXPENDITURES and PROFIT for a period of time in the future. See Self-Help Guide H for a detailed explanation of the preparation of a projected income statement. See also PRO FORMA.

PROJECTION

A FORECAST; an approximation of future events. Usually a projection is made by extrapolating known information into the future period, considering events that could affect the outcome.

PROMISSORY NOTE

A written promise to repay a specified sum of money either on demand or at a fixed date in the future. Often called simply a NOTE.

PROMOTION

That phase of marketing that highly praises a product or service, often by indirect means. To further the popularity, knowledge or awareness of the product or service. In personnel matters, to elevate the responsibility and rate of pay of a person in an organization. For example, a person may be promoted to the position of supervisor.

PROMPT PAY

A practice requiring payment within a given period; interest is due on the amount owed, particularly applicable to payment by governments.

PROPERTY

Things to which certain ownership rights or interests are attached; including to possess, to use, to encumber, to transfer and to exclude. Property is either real or personal. See REAL PROPERTY, PERSONAL PROPERTY.

PROPERTY TAX

Taxes required to be paid to a government body as a result of owning property. Most often refers to taxes paid on real estate property.

PROPOSAL

A document prepared by a bidder to perform work at a price and by a time, usually specifying how the work will be done. See also BID; QUOTE.

PROPRIETARY

An idea, document or product which is owned by a company or person, usually protected by secrecy.

PROPRIETOR

The sole owner of a business. See PROPRIETORSHIP.

PROPRIETORSHIP

Ownership of a business or entity. Often used interchangeably with sole or individual proprietorship. As opposed to other business forms such as corporation or partnership. Proprietorship is frequently used in start-up businesses because it is easy to organize and flexible to operate. Sole proprietors are considered self-employed and are eligible for KEOGH accounts for their retirement funds. For tax reporting, use Form 1040, Schedule C. See also SOLE PROPRIETORSHIP.

PROVISION

A clause or condition in a contract.

PROXY

In business, a person authorized to vote on behalf of a stockholder of a corporation; a written POWER OF ATTORNEY given by stockholders, authorizing a specific vote. In general, a proxy is the authorization by a person to act or speak for another.

PUBLIC ACCOUNTANT

An ACCOUNTANT who performs services for the general body of people and businesses, as opposed to an accountant who is employed by another business.

PUBLICATION #334

A document published by the federal government entitled TAX GUIDE FOR SMALL BUSINESSES that contains useful information needed by small businesses about business-related taxes.

PUBLICATION #583

A document published by the federal government titled INFORMATION FOR BUSINESS TAXPAYERS that contains helpful information for preparing a federal tax return for the U.S. government.

PUBLICITY

News about a business that is free and appears in any of the public media, as contrasted with advertising.

PUBLIC OFFERING

The sale, by a company or a large shareholder, of company shares of stock to the public. See INITIAL PUBLIC OFFERING.

PUBLIC RELATIONS (PR)

The act of promoting a specific image for the business.

PUBLIC STOCK OFFERING

The sale of shares of stock in a corporation to the public as a means of raising equity funds. Thereby, more owners of the corporation are acquired and the original owners’ share is reduced (diluted). Such a corporation is considered to be a publicly-held corporation, and ownership is transferred through sale and purchase of the stock on the open market to anyone who wants to buy from a person who wants to sell the stock or by means of a stock exchange.

PURCHASE

To obtain goods or services in exchange for money; to procure; to buy; to acquire products or services not available within the business.

PURCHASE ORDER

A written authorization prepared by a buyer for the acquisition of goods or services at a specified price. Once accepted by the seller, the purchase order becomes a legally binding purchase CONTRACT. A purchase order describes the features or characteristics of a product or service important to its purchase.

PURCHASING AGENT

A BUYER for a large company; the employee of a company who purchases goods or services for the company.

PURE COMPETITION

See PERFECT COMPETITION.

PV

See PRESENT VALUE.

 

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