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Vocabulary for intermediate business class

360 Degree Appraisal

Process of using multiple sources of appraisal to gain a comprehensive perspective on one's performance.

80/20 Principle

Generally accepted rule that 80 percent of a product's revenues come from 20 percent of its total customers.

9/11 Generation

People in their formative years at the time of the September 11, 2001, terrorist attacks.

Accelerated Depreciation Method

Method that produces larger depreciation charges in the early years of an asset's life and smaller charges in its later years.

Accepted Check

A check that the drawee bank has signed. This signature is a promise that the bank will pay the check out of its own funds.

Accessory Equipment

Capital items such as desktop computers and printers that typically cost less and last for shorter periods than installations.


A style of dealing with conflict involving cooperation on behalf of the other party but not being assertive about one's own interests.

Accommodation Party

Someone who does not benefit from an instrument but agrees to guarantee its payment.


Record within an accounting system in which increases and decreases in a specific asset, liability, equity, revenue, or expense are entered and stored.

Account Balance

Difference in an account between total debits and total credits (including the beginning balance).

Account Form Balance Sheet

Balance sheet that lists assets on the left side and liabilities and equity on the right.


Information and measurement system that identifies, records, and communicates relevant information about a company's business activities.

Accounting Cycle

Recurring steps performed each accounting period, starting with analyzing transactions and continuing through the post-closing trial balance (or reversing entries).

Accounting Equation

Equality involving a company's assets, liabilities, and equity. Assets = Liabilities + Equity Also called Balance Sheet Equation.

Accounting Information System

People, records, and methods that collect and process data from transactions and events, organize them in useful forms, and communicate results to decision makers.

Accounting Period

Length of time covered by financial statements. Also called Reporting Period.

Accounting Rate of Return

Rate used to evaluate the acceptability of an investment; equals the after-tax periodic income from a project divided by the average investment in the asset. Also called Rate of Return on Average Investment.

Accounts Payable

Liability created by buying goods or services on credit; backed by the buyer's general credit standing.

Accounts Payable Ledger

Subsidiary ledger listing individual creditor (supplier) accounts.

Accounts Receivable

Amounts due from customers for credit sales; backed by the customer's general credit standing.

Accounts Receivable Ledger

Subsidiary ledger listing individual customer accounts.

Accounts Receivable Turnover

Measure of both the quality and liquidity of accounts receivable; indicates how often receivables are received and collected during the period; computed by dividing net sales by average accounts receivable.

Accrual Basis Accounting

Accounting system that recognizes revenues when earned and expenses when incurred; the basis for GAAP.

Accrued Expenses

Costs incurred in a period, that are both unpaid and unrecorded; adjusting entries for recording accrued expenses involve increasing expenses and increasing liabilities.

Accrued Revenues

Revenues earned in a period that are both unrecorded and not yet received in cash (or other assets); adjusting entries for recording accrued revenues involve increasing assets and increasing revenues.

Accumulated Depreciation

Cumulative sum of all depreciation expense recorded for an asset.


One firm buying another.

Activity-Based Budgeting (ABB)

Budget system based on expected activities.

Ad Hoc Committee

A committee established to handle a specific situation and that dissolves after the task is accomplished.


To hold a formal hearing in a disputed matter and issue an official decision.

Adjusted Trial Balance

List of accounts and balances prepared after adjustments are recorded and posted.

Adjusting Entry

Journal entry at the end of an accounting period to bring an asset or liability account to its proper amount and update the related expense or revenue account.

Administered Marketing System

VMS that achieves channel coordination when a dominant channel member exercises its power.

Administrative Law

Concerns all agencies, boards, commissions, and other entities created by a federal or state legislature and charged with investigating, regulating, and adjudicating a particular industry or issue.

Adoption Process

Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again.

Advantages of Teamwork

Increased competitive advantage, increased productivity, greater creativity and more numerous alternatives for problem solving.

Adverse Impact

When a seemingly neutral employment practice has a disproportionately negative effect on a protected group.


Paid, non-personal communication through various media about a business firm, not-for-profit organization, product, or idea by a sponsor identified in a message that is intended to inform or persuade members of a particular audience.

Affective Conflict

Emotional disagreement directed toward other people.


A decision by an appellate court to uphold the judgment of a lower court.

Affirmative Action

Special efforts to recruit and hire qualified members of groups that have been discriminated against in the past.

Agency Problem

The possibility of conflict of interest between stockholders and management of a firm.

Aging of Accounts Receivable

Process of classifying accounts receivable by how long they are past due for purposes of estimating uncollectible accounts.

AIDA Concept

Steps through which an individual reaches a purchase decision: Attention, Interest, Desire, and Action.

AIO Statements

Items on lifestyle surveys that describe various activities, interest, and opinions of respondents.

Alderfer's ERG Theory

A human needs theory developed by Alderfer postulating that people have three basic sets of needs which can operate simultaneously.

Allowance for Doubtful Accounts

Contra asset account with a balance approximating uncollectible accounts receivable. Also called Allowance for Uncollectible Accounts.

Allowance Method

Procedure that (a) estimates and matches bad debts expense with its sales for the period and/or (b) reports accounts receivable at estimated realizable value.

Alternative Dispute Resolution

Any method of resolving a legal conflict other than litigation, such as: negotiation, arbitration, mediation, mini-trials, and summary jury trials.

Ambush Marketing

Attempt by a firm that is not an official sponsor of an event or activity to link itself to the event or activity.


Any addition to a legal document. The constitutional amendments, the first ten of which are known collectively as the Bill of Rights, secure numerous liberties and protections directly for the people.


Process of allocating the cost of an intangible asset to expense over its estimated useful life.

Annual Financial Statements

Financial Statements covering a one-year period; often based on a calendar year, but any consecutive 12-month (or 52-week) period is acceptable.


Series of equal payments at equal intervals.


The pleading, filed by the defendant in court and served on the plaintiff, which responds to each allegation in the plaintiff's complaint.


Laws designed to prevent restraints on trade such as business monopolies.


The party who appeals a lower court decision to a higher court.

Appellate Court

Any court in a state or federal system that reviews cases that have already been tried.


The party opposing an appeal from a lower court to a higher court.


Salesperson's initial contact with a prospective customer.


The use of a neutral third party to resolve a labor dispute.

Assessment Center

A managerial performance test in which candidates participate in a variety of exercises and situations.


Resources a business owns or controls that are expected to provide current and future benefits to the business.


The party who receives an assignment of contract rights from a party to the contract.


The act by which a party transfers contract rights to a third person.


The party who assigns contract rights to a third person.


A court order seizing property of a party to a civil action, so that there will be sufficient assets available to pay the judgment.

Authentic Leadership

A style in which the leader is true to himself or herself while leading.

Autocratic Leadership

Leadership style where others are simply told what to do. "My way or the highway"

Autonomous Work Groups

Groups that control decisions about and execution of a complete range of tasks.

Average Tax Rate

Total taxes paid divided by total taxable income.

Avoidable Expense

Expense (or cost) that is relevant for decision making; expense that is not incurred if a department, product, or service is eliminated.


A reaction to conflict that involves ignoring the problem by doing nothing at all, or deemphasizing the disagreement.

Baby Boomers

People born between 1946 and 1965.

Backward Integration

Process through which a manufacturer attempts to gain greater control over inputs in its production process, such as raw materials.

Bad Debts

Accounts of customers who do not pay what they have promised to pay; an expense of selling on credit. Also called Uncollectible Accounts.

Balance Column Account

Account with debit and credit columns for recording entries and another column for showing the balance of the account after each entry.

Balance Sheet

Financial Statement that lists types and dollar amounts of assets, liabilities, and equity at a specific date.

Balance Sheet Equation

Equality involving a company's assets, liabilities, and equity. Assets = Liabilities + Equity Also called Accounting Equation.

Bank Reconciliation

Report that explains the difference between the book (company) balance of cash and the cash balance reported on the bank statement.

Bank Statement

Bank report on the depositor's beginning and ending cash balances, and a listing of its changes, for a period.

Barriers to Entry

Conditions that prevent new companies from entering an industry.

Batch Processing

Accumulating source documents for a period of time and then processing them all at once such as once a day, week, or month.

Bearer Bonds

Bonds made payable to whoever holds them (the bearer). Also called Unregistered Bonds.

Behavioral Approach

A leadership perspective that attempts to identify what good leaders do - that is, what behaviors they exhibit.


Practice of comparing and analyzing a company financial performance or position with other companies or standards.

Beta Coefficient

The amount of systematic risk present in a particular risky asset relative to that in an average risky asset.


Expenditures to make a plant asset more efficient or productive. Also called Improvements.


A proposed statute that has been submitted for consideration to Congress or a state legislature.

Bill of Rights

The first ten amendments to the Constitution.


Written promise to pay the bond's par (or face) value and interest at a stated contract rate; often issued in denominations of $1,000.

Bond Certificate

Document containing bond specifics such as issuer's name, bond par value, contract interest rate, and maturity date.

Bond Indenture

Contract between the bond issuer and the bondholders; identifies the parties' rights and obligations.

Bonus Pack

Specially packaged item that gives the purchaser a larger quantity at the regular price.


Part of accounting that involves recording transactions and events, either manually or electronically. Also called Recordkeeping.

Bottom Line

Business jargon referring to the overall profitability of an organization.

Boundaryless Organization

Organization in which there are no barriers to information flow.

Bounded Rationality

A less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable.


Generating ideas without concern for their feasibility. A process in which group members generate as many ideas about a problem as they can; criticism is withheld until all ideas have been proposed.


Name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition's.

Brand Equity

Added value that a respected, well-known brand name gives to a product in the marketplace.

Brand Extension

Strategy of attaching a popular brand name to a new product in an unrelated product category.

Brand Insistence

Consumer refusal of alternatives and extensive search for desired merchandise.

Brand Licensing

Firm's authorization of other companies to use its brand names.

Brand Manager

Marketer within an organization who is responsible for a single brand.

Brand Mark

Symbol or pictorial design that distinguishes a product.

Brand Name

Part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm's offerings from those of its competitors.

Brand Preference

Consumer reliance on previous experiences with a product to choose that product again.

Brand Recognition

Consumer awareness and identification of a brand.

Break-even Time (BET)

Time-based measurement used to evaluate the acceptability of an investment; equals the time expected to pass before the present value of the net cash flows from an investment equals its initial cost.

Bridge Leaders

A leader who bridges conflicting value systems or different cultures.


The written legal argument that an attorney files with an appeal court.

Broadband Technology

Extremely high-speed, always-on internet connection.


One who acts as an agent for another in return for a fee or a commission.


Formal statement of future plans, usually expressed in monetary terms.

Budget Report

Report comparing actual results to planned objectives; sometimes used as a progress report.

Budgetary Control

Management use of budgets to monitor and control company operations.

Budgeted Balance Sheet

Accounting report that presents predicted amounts of the company's assets, liabilities, and equity balances as of the end of the budget period.

Budgeted Income Statement

Accounting report that presents predicted amounts of the company's revenues and expenses for the budget period.


Process of planning future business actions and expressing them as formal plans.


Creating supplies of excess resources in case of unpredictable needs.

Burden of Proof

The allocation of which party must prove its case. In a civil case, the plaintiff has the burden of proof to persuade the factfinder of every element of her case. In a criminal case, the government has the burden of proof.

Bureaucratic Style

A management style characterized by the manager's reliance on rules, regulations, policies, and procedures to direct subordinates.


One or more individuals selling products and/or services for profit

Business Cycle

Pattern of stages in the level of economic activity: Prosperity, Recession, Depression, and Recovery.

Business Entity Principle

Principle that requires a business to be accounted for separately from its owner(s) and from any other entity.

Business Ethics

The moral principles and standards that guide behavior in the world of business.

Business Plan

Formal document that outlines a company's objectives, how they will be met, how the business will obtain financing, and how much money the company expects to earn.

Business Products

Goods and services purchased for use either directly or indirectly in the production of other goods and services for resale.

Business Segment

Part of a company that can be separately identified by the products or services that it provides or by the geographic markets that it serves. Also called Segment.

Business Services

Intangible products that firms buy to facilitate their production and operating processes.

Business Strategy

The major actions by which a business competes in a particular industry or market.

Business-to-Business (B2B) Marketing

Organizational sales and purchases of goods and services to support production of other products, to facilitate daily company operations, or for resale.

Business-to-Business (B2B) Product

Product that contributes directly or indirectly to the output of other products for resale; also called industrial or organizational product.

Buyer Partnership

Relationship in which a firm purchases goods or services from one or more providers.

Buyer's Market

Market in which there are more goods and services than people willing to buy them.

Buying Center

Participants in an organizational buying action.

Buzz Marketing

Marketing that gathers volunteers to try products and then relies on them to talk about their experiences with their friends and colleagues.

Cafeteria Benefit Program

An employee benefit program in which employees choose from a menu of options to create a benefit package tailored to their needs.

Callable Bonds

Bonds that give the issuer the option to retire them at a stated amount prior to maturity.

Canceled Checks

Checks that the bank has paid and deducted from the depositor's account.


Loss of sales of an existing product due to competition from a new product in the same line.

Capital Asset Pricing Model (CAPM)

The equation of the SML showing the relationship between expected return and beta.

Capital Budgeting

Process of analyzing alternative investments and deciding which assets to acquire or sell.

Capital Expenditures

Additional costs of plan assets that provide material benefits extending beyond the current period. Also called Balance Sheet Expenditures.

Capital Expenditures Budget

Plan that lists dollar amounts to be both received from disposal of plant assets and spent to purchase plant assets.

Capital Leases

Long-term leases in which the lessor transfers substantially all risk and rewards of ownership to the lessee.

Capital Structure

The mixture of debt and equity maintained by a firm.


Record the cost as part of a permanent account and allocate it over later periods.