CAC - The government body responsible for union recognition.

CAP  (The Common Agricultural Policy) - Of the E.C.(European Community). It is designed to stabilise EC agricultural markets by fixing minimum prices for agricultural products.

Call - 1. option to buy (or call) an asset at a specified price within a specified period. Or 2. right to buy 100 shares of stock at a specified price that happens within a certain specified period. See also option. Or 3. the act of redeeming a preferred stock or bond issue prior to its maturity. A call provision is often issued on a security when the interest rate greater than one that has no call provision. This is because investors consider yield to call as opposed to yield to maturity.

Callable bond - Bond issue with a call (buy back) provision.

Call centre - The section of an organisation that handles phone communications with the firms customers or clients.

Called-up Share capital- The value of unpaid (but issued shares) which a company has requested payment for. See paid-up share capital..

Call premium - Amount in excess of par value that a company must pay when it calls a security. It is the difference between the call price and the maturity value. The issuer pays the premium to the security holder in order to acquire the outstanding security before the specified maturity date. The call premium is generally equal to one year's interest if the bond is called in the first year, and it declines at a constant rate each year thereafter.

Calorie supply per capita daily – The calories available to the people of a country.  This is based on the total food supply produced and imported, divided by the population and the number of days in a year.

Capacity - The level of output that corresponds to the firm's minimum short-run average total cost.

Capital (economics) - Factors of production that themselves have been produced by man e.g. machines, factories, ships.

Capital (Accounting) - 1. the money invested into a business by the owners. Or 2. an amount of money put into the business (often by way of a loan) as opposed to money earned by the business.

Capital account - A term usually applied to the owners equity in the business.

Capital account of the balance of payments - A section of a balance of payments accounts that records payments and receipts arising from the Import and exports of long-term and short­term financial capital.

Capital asset - Asset purchased for use in production over long periods of time rather than for resale. It includes (a) land, buildings, plant and equipment, mineral deposits, and timber reserves; (b) patents, goodwill, trademarks, and leaseholds; and (c) investments in affiliated companies.

Capital asset pricing model (CAPM) -Theory of asset pricing used to analyze the relationship between risk and rates of return in securities. The return of an asset or security is the risk-free return plus a risk premium based on the excess of the return on the market over the risk-free rate multiplied by the asset's systematic risk (which can­not be eliminated by diversification).

Capital budget  - Plan of proposed acquisitions and replacements of long-term assets and their financing. A capital budget is developed using a variety of capital budgeting techniques such as the payback method, the net present value (NPV) method, or the internal rate of return (IRR) method.

Capital charge - Is an amount of  money that is normally arrived at by the calculation of the money the firm has invested in capital multiplied by the (WACC) weighted average cost of capital. The capital charge is normally subtracted from a firms net operating profit minus tax to arrive at the economic profit figure.

Capital consumption  - See depreciation another class="d-title" name for the same concept.

Capital employed (CE)- Gross CE=Total assets, Net CE=Fixed assets plus (current assets less current liabilities).

Capital expenditure - Money spent on fixed assets which will last for more than one year.

Capital flight - The movement of financial capital overseas following domestic problems. Capital flight has significantly deepened the problems of  Third World debt.

Capital gain - The profit made by selling a share/asset for more it was bought for.

Capital gains tax- When a fixed asset is sold at a profit, the profit may be liable to a tax called Capital Gains Tax. Calculating the tax can be a complicated affair (capital gains allowances, adjustments for inflation and different computations depending on the age of the asset are all considerations you will need to take on board).

Capital goods - Goods that are use of other goods. Examples include and tractors. Consumers do not directly consume capital goods.

Capital intensive - Refers to production processes that require predominately man made resources i.e. machines.  This is often contrasted with labour intensive production (mainly labour is used).

Capital-labour ratio - A measure of the amount of capital per worker in an economy.

Capitalisation - 1. total amount of the various securities issued by a corporation. Capitalisation may include bonds, preferred and common stock. Or 2. a technique used by real estate appraisers to convert the income of a property into a value estimate for that property.

Capitalisation rate (CAP RATE) - A tool used by real estate people to determine a value of an investment. It is calculated by dividing a property's net operating income by its purchase price.

Capitalise - To charge an expenditure to an asset account because it benefits a period in excess of one year. For example, a betterment to a machine would be capitalised to the machinery account.

Capitalised costs - Are those business costs or expenses that are deducted or written off over a period of time via depreciation ond amortisation schedules.

Capitalised earnings - The value of a company determined by multiplying the price earnings ratio   by maintainable earnings.

Capital lease -  One in which the lessee obtains significant property rights.

Capital loss -  Refers to the higher purchase price above the sale price when the fixed are sold. The loss often given different or a special different treatment for tax purposes.

Capital maintenance - Principle in accounting stating that earnings can be realized only after an organization's capital has been maintained at a predetermined level..

Capitalism - An economic system individuals privately own the productive resources of land and capital.

Capital market - The market of debt or equity securities.

Capital movements - The flow of international boundaries, for investment in plant and machinery, or in response to interest rate changes or expectations of interest rate changes.

Capital rationing - Selecting the mix of acceptable projects that provides the highest overall net present value (NPV) when a company has a limit on the budget for capital spending. The probability index is used widely in ranking projects competing for limited funds

Capital reduction - The reducing of a company's declared or stated capital base.

Capital replacement (economic depreciation) - This refers to repair and maintenance of machinery used in production. Capital replacement is often regarded as an expense which may be  discretionary in any given year. Ultimately this money must be spent in order to keep the capital stock of an entity working so that over a period of time or in the longer term, the firm operations can continue.

Capital reserve - Refers to fund that are set aside for a specific identified purposes, thereby these funds  cannot normally be used for other reasons.

Capital stock - The aggregate quantity of capital goods. Or  equity shares in a corporation that is authorised by its Articles of Incorporation and issued to stockholders. The two basic types of capital stock are common stock and preferred stock.

Capital structure - The way in which funds are raised by a business.

Carry forward (CF) -  Refers to items of data that are carry forward into the subsequent transactions.

Carrying value - Amount shown on an entity's books for assets, liabilities, or owners equity, net of reductions or offsets such as for accumulated depreciation, allowance for bad debts, and bond discount; also called book value. It may refer to the entire firm's excess of total assets over total liabilities.

Cartel  - A group of producers who enter into a collusive agreement to restrict output in order to raise prices and profits.

Cash - Money deposited in a bank and items that a bank will accept for immediate deposit (e.g., paper money, coins, checks, money orders). Items not included in the definition of cash are post-dated checks, IOUs, and notes receivable. The cash on hand and cash on deposit in the bank are shown in the balance sheet as one figure. Cash is the most liquid of the current assets and is listed first. Note that restricted cash in a bank account is not considered a current asset. An example is cash held in a foreign country where remission restrictions exist.

Cash accounting - This term describes an accounting method whereby only invoices and bills which have been paid are accounted for

Cash book- A journal(s) where a business's cash sales and purchases are entered. A cash book can also be used to record the transactions of a bank account. The side of the cash book which refers to the cash or bank account can be used as a part of the nominal ledger (rather than posting the entries to cash or bank accounts held directly in the general ledger').

Cash and cash equivalents -  Means any near cash items including marketable securities and cash.

Cash budget - Budget for cash planning and control that presents expected cash inflow and outflow for a designated time period. The cash budget helps management keep cash balances in reasonable relationship to its needs. It aids in avoiding idle cash and possible cash shortages. The cash budget typically consists of four major sections: (I) receipts section, which is the beginning cash balance, cash collections from customers, and other receipts; (2) disbursement section comprised of all cash payments made by purpose; (3) cash surplus or deficit section showing the difference between cash receipts and cash payments; and (4) financing section providing a detailed account of the borrowings and repayments expected during the period.

Cash cow - A business or the segment of the business that generates tons of money.

Cash cycle - Refers to the period of time, often given days, in between the purchasing of the raw materials and the receipt of payment from accounts receivable which was generated from the final sale of the finished item.

Cash payments/disbursements journal - The journal that records all payments or disbursements.

Cash discount - A reduction of some portion of the amount to be paid because the buyer is willing to pay in cash, as compared buying on credit.  Many individuals like cash payments as it can be used as a way of evading tax.

Cash dividend - The payment of a share of earnings to the individual shareholders.

Cash earnings - Refers to the excess of cash revenues over cash expenses. This is different from other earnings as it doesn't include non cash expense like depreciation or amortisation.

Cash flow - Cash inflows and outflows over a period of time.

Cash flow analysis - This is a  analysis that considers the amount and timing of cash in to a entity with the timing and amount of cash out. A firm’s cash flow position (or liquidity) can have a large effect on the firms ability to keep running. This position is not necessarily shown in a cost-benefit analysis.

Cash flow cycle -  Means of showing the stages between paying out cash for labour, materials, etc. And receiving cash from the sale of good.

Cash flow forecast - An estimate of future cash inflows and outflows of a business, usually on a monthly basis.

Cash flow forecast statement - A prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each.

Cash flow statement – A financial statement which shows sources and uses of cash in a trading period.

Cash at bank -  Means notes, coin and currency items deposited with the bank.  If this is negative it is called overdraft.

Cash inflows - The sums of money received by a business during a period of time.

Cash on hand - Means notes ,coin and currency items on hand. A firm cannot have a negative balance of cash on hand.

Cash outflows - The sums of money, paid out by a business during a period of time.

Cash ratio - A like the quick ratio but it only considers the ratio of cash and other marketable securities as compared to a firms current liabilities. This ratio  is indicative of  extent or degree to which liabilities of a firm could be turned into cash immediately. This ratio is also called the liquidity ratio.

Cash receipts journal - Is the journal which records cash receipts.

Cash reserve ratio (CRR) -  This is the ratio which individual banks need to keep on hand in the form of cash reserves with the central bank. The CRR  is calculated as a percentage of the banks demand and time deposits from customers. The CRR  is to ensure both the liquidity and safety of the depositors money with the banks.  This ratio will directly affect the size of the credit multiplier.

Cash shortage and overage - Situation in which the physical amount of cash on hand differs from the book recorded amount of cash. When a business is involved with over-the-counter cash receipts, occasional errors may occur in making change. The cash shortage or overage is revealed when the physical cash count at the end of the day does not agree with the cash register tape. Assuming that the count is $600 and the cash register reading shows $620, the cash shortage and overage account would be charged for $20. It is shown in the income statement.

Catchline - A memorable phrase which seeks to strengthen a product's brand identity.

Catch-up effect - The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich.

Caveat - Refers to a warning or prohibition against certain activities; under the law.  It may also be  a formal document filed with the court  to suspend/stop a proceeding for a period of time.

Cellular manufacturing - Involves producing a 'family of products' in a small self-contained unit (a cell) within a factory.

Centering - A method used in the calculation of a moving average where the average is plotted or calculated in relation to the central figure.

Central bank - A bank that acts as banker to the commercial banking system and often to the government as well. In the modern world, usually a government ­owned-and-operated institution that controls the banking system and is the sole money-issuing authority.

Centralised - A management structure in which most decisions are taken at the centre, or at higher levels of management.

Centrally planned or command economy - An economy where all economic decisions are taken by the central authorities.

Central tendency - A measure of the most likely or common result from a set of data (the average).

CEO - Chief Executive Officer. The CEO is the principle person responsible for day to day running of a company.

Certainty - Situation in which there is absolutely no doubt about which event will occur, and there is only one state of nature with 100% probability attached.

Certificates of deposit (CDs) - Certificates issued by banks for fixed-term interest bearing deposits. They can be resold by the owner to another party.

Certificate of origin -  Refers to a document that tells the place where the items were originally made. The certificate of origin document is often a legal requirement for countries if they wish to Import sensitive merchandise i.e. military equipment.

Certified accountant - Title given by the Association of Certified Accountants in the United Kingdom, Canada, Australia, India, and other British Commonwealth countries. They use the initials ACA (for member of the Association of Certified Accountants) or FCCA, which identifies a Fellow of the Association, one who has passed additional requirements. The accountant is authorized to provide an audit opinion on the propriety of a company'sfinancial statements.

Certified financial statements - Refers to financial statements which have had a formal audit carried out by by a CPA and contain a statements of certification given by the certified public accountant.

Certified public accountant (CPA) - Refers to an accountant who is licensed and therefore allowed to practice public accounting.  The requirements differ in different countries.

Ceteris paribus - Literally, "other things being equal"; usually used in economics to indicate that all variables except the ones specified are assumed not to change.

Chain of command - The structure within an organisation which allows instructions to be passed down from senior management to the lower levels of management.

Chair person of the board - Is the head or in charge of the board of directors of a company, and generally is considered to be the boss of the corporation.

Change in demand - An increase or decrease in the quantity demanded at each possible price of the product, represented by a shift in the whole demand curve.

Change in supply - An increase or decrease in the quantity supplied at each possible price of the commodity, represented by a shift in the whole supply curve.

Change in the quantity demanded - An increase or decrease in the specific quantity bought, represented by a change from one point on a demand curve to another point, either on the original demand curve or on a new one.

Change in the quantity supplied - An increase or decrease in the specific quantity supplied, represented by a change from one point on a supply curve to another point, either on the original supply curve or on a new one..

Changes in demand or supply – These changes cause markets to adjust. Whenever such changes occur, the resulting 'disequilibrium' will bring an automatic change in prices, thereby restoring equilibrium (Le. a balance of demand and supply)

Channel costing - The fulfilment cost information pertaining to distribution channels.

Channel of communication - The route by which a message is communicated from sender to receiver.

Channel of distribution - The means by which the product is passed from the place of production to the customer or retailer.

Charge back - Refers to a credit card order which has been processed and is subsequently cancelled by the cardholder contacting the credit card company directly (rather than through the seller). This results in the amount being 'charged back' to the seller (often incurs a small penalty or administration fee to the seller).

Charted accountant (CA) - A British accountant who is a member of the Institute of Chartered Accountants.

Chart of accounts -  A list showing all the accounts held in the nominal ledger (also called general ledger). The Chart of Accounts normally consist of and are arranged normally in this following way: Assets, liabilities, owners equity or stockholdersequity, revenue, and expenses.

Chattel mortgage –  Mortgage on personal (as opposed to real) property.

Cheque (check) - A draft or demand drawn or presented against a specific bank, that is payable upon the demand (when presented to)  to the bank by the person or entity who is class="d-title" named on the draft.

Cheque (check) book - The journal or source document that records payments by cheque.

Churn rate -  The proportion of clients/customers (e.g., cable TV subscribers) who cancels the subscription they have each month on average.

Circular flow model - A model of the flows resources, goods, and services, as well as money,  receipts, and payments for them in the economy.

Circular flow of income - The flow of money around the economy.

Circulating assets - The opposite to fixed assets . Circulating assets describe those assets that turn from cash to goods and back again (hence the term circulating). Typically, you buy some raw materials, start to manufacture a product (the asset is called work in progress at this point), produce a product (it is now stock ), sell it (it is now back to cash again).

Claimant unemployment  - Those in receipt of unemployment-related benefits.

Classical dichotomy - The theoretical separation of nominal and real variables.

Classical unemployment - See real wage unemployment.

Classification - The process of separating and distributing items into classes/categories of the same or similar type. In accounting information is often classified as: assets, liabilities or equity and there may be subsets to these three classifications.

Clearance letter (document) –  Documented certification or a letter from a recognised authority that the person or business cleared has met certain specific requirements, actions, payments and such forth.

Clearing account - Usually a temporary account containing costs or amounts that are to be transferred to another account. An example is the income summary account containing revenue and expense amounts to be transferred to retained earnings/profit at the close of a fiscal period.

Clearinghouse - An institution where interbank indebtedness, arising from the transfer of cheques between banks, is computed and offset and net amounts owing are calculated.

Client (customer) – A person or company who purchases goods and/or services from a firm.

Closed economy - An economy that has no foreign trade.

Closed shop - A practice which prevents workers being employed in a business unless they belong to a trade union.

Closing cash (or bank) balance - The amount of cash held by the business at the end of each month. This becomes next month's opening cash balance.

Closely held corporation - Firm that has only a few stockholders. It contrasts with a privately held corporation in that a closely held corporation is public although few of the shares are traded. The so­called "corporate pocket-books" may become subject to the additional personal holding company tax on income not distributed. For example, deductions and losses in transactions between a major stockholder and the corporation may be disallowed under certain circumstances.

Closing account - is the process of determining the final balance of an account and then the posting of the entry in order to offset this balance.

Closing-down point - The level of output in the short run where a firm should cease its operations. i.e. where marginal cost is equal to average variable cost .

Closing entry - Is a journal entry used at the end of a particular financial period with the intention of transferring the net of revenue minus expense items from the income (profit and loss) statements to the owners equity. Entries are for nominal accounts and not real accounts. At the end of the year, expenses are credited so that zero bal­ances are left in them, and the total is debited to the income summary account revenue accounts are debited to arrive at zero balances, and the total is credited to the income summary account. The net income or loss that now exists in the income summary account is then transferred to retained earnings/profit. After the closing entries, the new year will start fresh in that no income statement account balances will exist.

Closing the books - A term used to describe the journal entries necessary to close the sales and expense accounts of a business at year end by posting their balances to the profit and loss account, and ultimately to close the profit & loss account too by posting its balance to a capital or other account.

Cluster sampling - Method of selecting groups of units. The first unit of each group is selected with the use of a random number table. This allows selection of more than one item at a time. In cluster sampling, the population is broken into groups of items, and a random sample is selected from all the clusters. Each cluster becomes a sampling unit.

Coase theorem - The proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own.

COD - Cash On Delivery; which is exactly what it means.

Coding of accounts - Assignment of an identification number to each account in the financial statements. A chart of accounts lists the account titles and account numbers being used by a business. For example, the numbers I to 29 may be used exclusively for asset accounts; numbers from 30 to 49 may be reserved for liabilities; numbers in the 50s may signify owners equity accounts; numbers in the 60s may represent revenue accounts; and numbers from 70 to 99 may designate expense accounts. In large or complex businesses with many more accounts, a more elaborate coding system would be needed. Some companies use a four-digit coding system. The coding system is especially necessary for computerised accounting.

COGS - Cost of goods sold

COGS (Cost of good sold) ratio = COGS / Total Sales.

Collateral - Assets used as security for the extension of a loan.

Collateralise - To pledge asstes to secure a debt. These assets will be given up if the borrower defaults on the terms and conditions spec­ified in the debt agreement. An example is pledging Inventory to collateralize a bank loan.

Collectables - Art, stamps, coins, antiques, and other related items. They offer capital gains potential, inflation protection, and aesthetic enjoyment. Collectibles are acquired through dealers, at auctions, or directly from previous owners. Among the drawbacks are high security and insurance cost, poor liquidity, lack of income, and possible forgeries. Information about collectibles sometimes appears in magazines like Money and creditor/Investor, and major categories of collectibles have magazines and newsletters devoted exclusively to them

Collection period - Number of days it takes to collect accounts receivable. The collection period should be or can be compared to the terms of sale. A long collection period may indicate higher risk in collecting account; it ties up funds that could be invested elsewhere or used to make timely payments. It equals the number of days in a year divided by the accounts receivable turnover. Assume a 360-day year and turnover rate of 10 times. The collection period is 36 days.

Collective agreements - The agreements reached through the process of collective bargaining.

Collective bargaining - A method of determining conditions of work and terms of employment through negotiations between employers and employee representatives.

Collective consumption goods - Goods or services that, if they provide benefits to anyone, can, at little or no additional cost, provide benefits to a large group of people. Also called public goods.

Collusion - Price determination by oligopolists which is coordinated and aims to avoid the danger of price wars breaking out or agreements between businesses designed to reduce competition.

Collusive oligopoly - Where oligopolists agree, (formally or informally) to limit competition between themselves. They may set output quotas, fix prices, limit product promotion or development, or agree not to 'poach' each other's markets.

Collusive tendering - Where two or more firms secretly agree on the prices they will tender for a contract. These prices would be above those which would be put in under a genuinely competitive tendering process.

Combined financial statements - 1. presentation in which the balance sheet accounts or income statement accounts of a related group of entities have been added together so they are considered as one reporting entity. Inter-company transactions are eliminated in a combined statement. Or 2. in governmental accounting, statement in which the balance sheets of all fund and account groups are shown without inter-fund transfers being eliminated

Comfort letters - Term used when underwriters request "comfort" from an auditor about financial information in SEC registration statements not covered by the auditor's opinion and on subsequent events after the opinion date.

Command-and-control (CAC) systems - The use of laws or regulations backed up by inspections and penalties (such as fines) for non-compliance.

Command economy - An economy in which the decisions of the government (as distinct from households and firms) exert the major influence over the allocation of resources.

Commercial bank - A financial institution that provides commercial banking services. A commercial bank accepts deposits, gives business loans and provides other services to businesses.

Commercial bills - Bills of exchange issued by firms. .

Commercial loan -  Short-term business loan usually issued for a term of up to six months.

Commercial paper - Short-term unsecured loan of a financially strong company having a maturity up to 270 days. It is typically issued on a discount basis meaning that the interest is subtracted immediately from the face of the debt to obtain the cash proceeds.

Commercial policy - A government's policy involving restrictions placed on international trade. Also called trade policy.

Commission - A payment system where employees are paid a percentage of the value of each good or service that is sold.

Commitment - Expected expenditure backed by an agreement. A commitment may be disclosed in a footnote but generally is not given accounting recognition. Disclosure includes its nature and amount. However, a commitment can be recorded in the case of a loss commitment on a purchase contract where the market price has significantly declined below the agreed-upon delivery contract price. The entry for the difference is to debit loss on purchase commitment and credit estimated liability. But a gain on a purchase contract is not recognized because it violates conservatism.

Committed costs -  Costs, usually fixed costs, which the management of an organization has a long-term responsibility to pay. Examples include rent on a long-term lease and depreciation on an asset with an extended life.

Commodity - An article of commerce or product that can be used for commerce. In a narrower sense, commodity is product traded on an authorised commodity exchange. Some types of commodities: agricultural products, metals, petroleum, foreign currencies, financial instruments and indices, etc.

Commodity money - Money that takes the form of a commodity with intrinsic value common resources goods that are rival but not excludable.

Commodities futures - Contracts in which sellers promise to deliver a given commodity by a certain date at a predetermined price. Price is agreed to by open outcry on the floor of the commodity exchange. The contract specifies the item, the price, the expiration date, and a standardised unit to be traded.

Common currency - An agreement between countries to use the same currency for all business and other transactions, such as the euro in the European Union.

Common law (case law) -An unwritten body of law based on general custom in England.

Common market - A customs union where the member countries act as a single market with free movement of labour and capital, common taxes and common trade laws.

Common stock - Share in a public company or privately held firm. Common stockholders have voting and dividend rights. The issuing company shows common stock at its total par value, or no-par value, or stated value in the capital stock section of stockholders' equity.

Communication - The transferring of a message from the sender to the receiver, who understands the message.

Communication media - The written, oral or methods used to communicate a message.

Communication nets - The ways in which members of a group communicate with each other.

Communist country - A country in which there is limited private ownership of productive capital and of firms, limited reliance placed on the market as a means of allocating resources, and in which government agencies plan and direct the production and distribution of most goods and services.

Company –  A form of business ownership where the business has incorporated.  This gives the shareholders limited liability.

Comparability - The quality or state of being similar or alike.

Compensating differential  - A difference in wages that arises to offset the non­monetary characteristics of different jobs.

Competitive advantage (business) - The advantage that a business has over rivals who are competitors. It can be gained in a variety of ways.

Comparative advantage  (theory of) - A country has a comparative advantage in producing a good over another if the opportunity cost of producing that good is lower.  The law of comparative advantage. Provided opportunity costs of various goods differ in two countries/both of them can gain from mutual trade if they specialise in producing :(and exporting) those goods that have relatively low opportunity costs compared within the other country.

Comparative statistics - Short for comparative static equilibrium analysis; the derivation of predictions by analysing the effect of a change in some exogenous variable on the equilibrium position.

Compensating balances - Deposit that a bank can use to offset an unpaid loan. No interest is earned on the compensating balance, which is stated as a percentage of the loan.

Compensating error- A double-entry term applied to a mistake which has cancelled out another mistake.

Competitor analysis - Identifying the strengths and weaknesses of competitors and their products.

Competition - Rivalry among buyers and sellers of outputs, or among buyers and sellers of inputs (i.e. factors of production).

Competition based pricing - Methods of pricing be upon the prices charged by competitors.

Competition for corporate control - The competition for the control of companies through takeovers.

Competitive marketing strategies - Marketing strategies directly based upon particular approaches to dealing with competitors.

Competitive pricing - A pricing strategy where the product is priced in line with, or just below, competitors' prices to try to capture more of the market.

Compilation - The presentation of financial statement information by the entity without theaccountant’s assurance as to conformity with Generally Accepted Accounting Principles (GAAP). In performing this accounting service, the accountant must conform to the AICPA Statements on Standards for Accounting and Review Services (SSARS).

Complement - Two goods are considered complements if a change in the price of one causes an opposite shift in the demand for the other. For example, if the price of computers goes up, the demand for computer games will fall; if the price of computers goes down, the demand for computer games will increase.

Complementary assets - Assets that a business requires together to be successful

Complementary goods - A pair of goods consumed together. As the price of one goes up, the demand for both goods will fall.

Completed contract method of accounting - Profit is recognized only when a long-term construction contract is completed.

Compliance audit - The review of financial records to determine whether the entity is complying with specific procedures or rules.

Component bar chart - A chart where each bar is divided into a number of sections to illustrate the components of a total.

Composite demand- When a good is demanded for two or more distinct uses.

Compounding - The process of adding interest each year to an initial capital sum. .

Compound interest - Apply interest on the capital plus all interest accrued to date. Eg. A loan with an annually applied rate of 10% for 1000 over two years would yield a gross total of 1210 at the end of the period (year 1 interest=100, year two interest=110). The same loan with simple interest applied would yield 1200 (interest on both years is 100 per year).

Compound journal entry - A journal entry that involves more than one debit or more than one credit or both.

Compromise strategy - One whose worst outcome is better than the maximax strategy and whose best outcome is better than the maximin strategy.

Compulsory liquidation -  The winding-up of a company by a court.

Computer aided design (CAD) - The use of computers when designing products.

Computer aided manufacture (CAM) - The use of computers in the manufacture of products.

Computer numerically controlled machines - Machines which have their operations controlled by a computer program.

Computer integrated manufacture- The use of computers to control the entire production process. Information technology - the recording and use of information by electronic means.

Concentration ratio - The percentage of all sales contributed a small number (4,8) of the largest firms in an industry.

Conducive - Tending to bring about or being partly responsible for, e.g. current working conditions may not be conducive to productivity.

Conduit - The primary means by which something is transmitted.

Conglomerate integration - A firm merges with or takes over another firm in a completely different industry. Also known as diversification.

Conglomerate or diversifying merger - The merging of firms involved in completely different business activities.

Confidence level - A statistical calculation which allows a business t

Condorcet paradox - The failure of majority rule to produce transitive preferences for society constant returns to scale the property whereby long run average total cost stays the same as the quantity of output changes.

o gauge the extent of its confidence in the results of research

Conservatism principle - Accounting guideline that understates assets and revenues and overstates liabilities and expenses. Expenses should be recognised earlier than later while revenue should be recognized later than sooner. Thus, net income will result in a lower figure. Conservatism holds that in financial reporting it is preferable to be pessimistic (understate) than optimistic (overstate) since there is less chance of financial readers being hurt by relying on prepared financial statements. One can argue that pessimism is needed to counteract the optimism of management. However, excess conservatism may result in misguided decisions.

Consignment - When goods are offered for sale on behalf of another without the seller actually purchasing or taking title to the goods. Only when there is a subsequent sale does the owner receive any payment.

Consistency principle - 1. uniformity of accounting procedures used by an accounting entity from period to period. Or 2. uniformity of measurement concepts and procedures used for related items within the company's financial statements for one period. It is difficult for financial statement users to make projections when data are not measured and classified in the same manner over time. A change in accounting principle should not be made unless it can be justified as being preferable.

Consolidated entity – A user-defined combination of several consolidation units, grouped together for consolidation and reporting purposes.

Consolidated financial statements - Statement that brings together all assets, liabilities, and operating accounts of a parent company and its subsidiaries. It presents the financial position and results of operations of the parent company and its subsidiaries as if the group were a single company with one or more branches.

Consolidation - Similar to refinancing, but there is no loan fee. It simplifies loan repayment by combining several types of federal education loans into one new loan. (In the case of Direct Loan consolidation, the interest rate may be lower than one or more of the underlying loans.).

Consortium - An association of companies for some definite purpose.

Constant-cost industry - An industry in which costs of the most efficient size firm remain constant as the entire industry expands or contracts in the long run.

Constant dollar - When the dollar amount is adjusted for inflation.

Constant prices - Currency expressed in terms of real purchasing power, using a particular year as the base or standard of comparison.

Constant purchasing power accounting - A complete accounting system which replaces money with an index of general purchasing power.

Constant returns to scale - Technological conditions under which the percentage change in a firm' s output is equal to the percentage change in its use of inputs.

Constraints - Factors which restrict decision making.

Consumable - A resource attribute representing a type of capacity. A resource with consumable capacity can have its capacity value permanently altered as a result of being tasked, e.g. chemicals in a manufacturing process or office supplies.

Consumers - Individuals who use or 'consume' goods and services to satisfy their needs and wants.

Consumer durable - A consumer good that lasts period of time, during which the consumer can continue gaining utility from it.

Consumer (or consumption) goods - Goods that are used directly by consumers to generate satisfaction. Compare with capital goods.

Consumer panels  - Groups of people who agree to provide information about a specific product or general spending patterns over a period of time.

Consumer price index (CPI) – Is a weighted index that measure of change in consumer prices as determined by a monthly survey.   It is used to show the level of inflation.  See retail price index (RPI)

Consumer sovereignty - The concept of the consumer as the one who, by his or her spending, ultimately determines which goods and services will be produced in the economy. In principle, competition among producers causes them to adjust their production to the changing desires of consumers.

Consumer surplus - The difference between the total value that consumers place on all units consumed of a product and the payment that they must make to pur­chase that amount of the product.

Consummate - To bring to completion or fruition; conclude, e.g., consummate a business transaction.

Consumption - The process of using up goods and services.

Consumption expenditure - In macroeconomics, household expenditure on all goods and services. Represented by the symbol C as one of the four components of aggregate expenditure.

Consumption function - The relationship between total desired consumption expenditure and all the variables that determine it; in the simplest cases, the relationship between consumption expenditure and disposable income and consumption expenditure and national income.

Consumption goods - Goods that are bought by households to use up, such as theatre tickets, food and clothing.

Consumption of domestically produced good and services (Cd) -The direct flow of money payments from households to firms.

Contestable market - A market in which there are no sunk costs of entry or exit so that potentialentry may hold profits of existing firms to low levels-zero in the case of perfect contestability.

Contingency plan - A plan that provides an outline of decisions and measures to be taken if defined circumstances, outside the control of the affected organisation, should occur.

Contingent asset - Item that depends on some future happening that mayor may not occur. Its existence or value is not assured. A contingent asset may emanate from a contingent liability. An example of a con­tingent asset may be a successful lawsuit claiming damages of another party. It cannot be shown as an asset on the balance sheet because it vio­lates conservatism. However, footnote disclosure may be made.

Contingent liability - Potential liability that may exist in the future depending on the outcome of a past event. Examples are an adverse tax court decision, lawsuit, and notes receivable discounted. Footnote disclosure is required of the circumstances for possible losses. Note that an estimated liability can be booked only if there is a proba­ble loss.

Continuity assumption - Accounting assumption that expects a business to con­tinue in life indefinitely; also called going concern. It is the basis for using historical cost to value accounts rather than liquidation value since the company will remain in existence.

Continuous budget - A budget that rolls ahead each month or period without regard to the fiscal year, i.e., a twelve-month or other periodic forecast is always available.

Contra account - Refers to an account which role is  to offset another account. i.e. If a purchase is returned the 'purchase returns' account is a contra account - it reduces the value of purchases.  For sales it would be the 'sales returns account.

Contract law -  That body of law which regulates the enforcement of contracts. Contract law has its origins thousands of years ago as the early civilizations began to trade with each other, a legal system was created to support and to facilitate that trade. The English and French developed similar contract law systems, both referring extensively to old Roman contract law principles such as consensus ad idem or caveat emptor.

Contract of employment - A legal agreement between employer and employee listing the rights and responsibilities of workers.

Contractor - The person or entity who will provide the goods or services under the provisions of the contract..

Contribution - The amount of money left over after a sale when all direct (variable) costs have been covered. i.e., selling price minus direct costs.

Contribution margin (CM) - The difference between sales and the variable cost s of the product or service, also called marginal income. It is the amount of money available to cover fixed costs and generate profits.

Contribution margin analysis - A technique used in brand marketing and product management to help a company decide what product(s) to add to its product portfolio. The manager asks what will happen to profits if a new product is added or an existing product is discontinued. Calculations take into account additional revenues, additional costs, effects on other products in the portfolio (referred to as cannibalization), and competitors' reactions.

Contribution margin ratio - The calculation showing contribution margin as a percentage of sales.

Contribution sales ratio (C/S Ratio) - A tool used in profit management. It is important to establish the C/S ratio: C/S ratio = (Sales revenue – Variable cost of sales)/Sales revenue x 100. If a company achieves a high average marginal profit ratio of say, 40%, it does not mean that it will achieve high profits. The eventual profit will be dependent on the level of fixed costs within the organization.

Control Account-  Is an account which gives a summary of the balance of all the accounts another ledger.  subsidiary ledger will normally have a control account which will be shown in the general ledger.

Controller - Usually an experienced accountant who directs internal accounting processes and procedures, including cost accounting.

Convention - Is an agreement, principle or statement expressed or implied that is used to solve given types of problems. Conventions allow a standardised approach to problem solving and behaviour in certain situations. An example of a convention is placing debits on the right and credits on the left of an account is termed an accounting convention.

Convergence of economies - When countries achieve similar levels of growth, inflation, budget deficits as a percentage of GDP, balance of payments, etc.

Conversion costs -  Direct labour + manufacturing overhead.

Convertible currency - Any national currency that can be easily exchanged for that of another country.

Cook the books - To falsify is misrepresent accounting information.

Cooperative - 1. non-taxable entity that is formed to eliminate the middleman and gain profits or savings that would have been paid to it. Profit or savings is periodically distributed by the proportion of transactions and not in proportion to each member's investment. Or 2. an entity owned by members. For example, in terms of real estate, ownership shares in the apartment building are held by the occu­pants. They make decisions regarding the property.

Cooperative advertising - A joint advertising strategy under which costs are shared; e.g. by a manufacturer and another firm that distributes its products.

Cooperative solution - A situation in which existing firms cooperate to maximize their joint profits.

Copyright - Protection given by law to authors of literary, musical, artistic, and similar works. The copyright holder enjoys the following exclusive rights: (1) to print, reprint, and copy the work; (2) to sell, assign, or distribute copies; and (3) to perform the work. A copyright is recorded at its acquisition price. The legal life of a copyright is the life of the author plus 70 years. Rarely will the economic life of a copyright exceed its legal life. For example, some textbooks become obsolete in five years. As other limited life intangible assets, copyrights are amortized over the period benefited.

Core business - The sector(s) of business activity that is the reason or purpose for being, e.g. providing meals within a restaurant would be considered core, while sales of art works on the wall may be non core.

Core workers -Workers, normally with specific skills, who are employed on a permanent long-term basis.

Corporate advertising - Advertising which is meant to promote a whole company rather than a particular product or product line.

Corporate culture - The values. beliefs and norms that are shared by people and groups in an organisation.

Corporate governance - The system of checks and balances designed to ensure that corporate managers are just as vigilant on behalf of long-term shareholder value as they would be if it was their own money at risk. It is also the process whereby shareholders-the actual owners of any publicly traded firm-assert their ownership rights, through an elected board of directors and the CEO and other officers and managers they appoint and oversee. In the heels of corpo­rate scandals including the Enron debacle in 2002, a series of sweeping changes are being sought, such as forcing boards to have a majority of independent directors, granting audit committees power to hire and fireaccountants, banning sweetheart loans to officers and directors, and requiring shareholder's approval for stock option plans. More specifi­cally, the following principles constitute good governance:

1. To avoid conflicts of interest, a company's board of directors should include a substantial majority of independent directors-indepen­dent meaning that directors don't have financial or close personal ties to the company or its executives.

2. A company's audit , nominating, and compensation committees should consist entirely of independent directors.

3. A board should obtain shareholder approval for any actions that could significantly affect the relationship between the board and shareholders, including the adoption of anti-takeover measures such as "poison pills."

4. Companies should base executive compensation plans on pay for performance and should provide full disclosure of these plans.

5. To avoid abuse in the use of stock options (and executive perquisites), all employee stock option plans should be submitted to shareholders for approval.

Corporate responsibility – The willingness of a business to accept responsibility  for its actions and their impact on a range of stakeholders.

Corporation - Business organised as a separate legal entity with ownership evidenced by shares of stock.  The corporation is a legal entity separate from its owners. Advantages of a corporation are the ability to obtain large amounts of financing through a public issuance, ease of transferring shares, limited liability of owners, unlimited life, and professional management.

Corporation (company) tax - The tax payable by corporations.  Often it is a flat rate or proportional tax.

Correcting entry -  An  adjusting entry, is required at the end of an accounting period if a mistake was made in the accounting records during the period.

Correlation - The relationship between two sets of variables.

Correlation coefficient - A measure of the extent of the relationship between two sets of variables.

Cost - 1. the sacrifice, measured by the price paid, to acquire, produce, or main­tain goods or services. Prices paid for materials, labour, and factory overhead in the manufacture of goods are costs. Or 2. an asset. The term cost is often used when referring to the valuation of a good or service acquired. When it is used in this sense, a cost is an asset. The concepts of cost and expense are often used interchangeably. When the benefits of the acquisition of the goods or services expire, the cost becomes an expense or loss. An expense is a cost with expired benefits. A loss is an expense (expired cost) with no related benefit.

Cost accounting- Is concerned with cost accumulation for inventory valuation to meet the requirements of external reporting and internal profit measurement. (see management accounting)

Cost accumulation - Collection of costs in an organized fashion by means of a cost accounting system. There are two primary approaches to cost accumulation: JOB ORDER and PROCESS COSTING. Under a job order system, the three basic elements of manufacturing costs - direct materials, direct labour, and factory overhead are accumulated according to assigned job numbers. Under a process cost system, manufacturing costs are accumulated according to processing department or cost centre.

Cost allocation - The assignment to each of several particular cost-centres of an equitable proportion of the costs of activities that serve all of them, i.e. shared cost pools.

Cost-based pricing- Where a pricing is based on cost of production.

Cost-benefit analysis - A technique which involves taking into account all social costs and benefits. when deciding on a course of action.

Cost centre- Is used to describe a location to which overhead costs are assigned.

Cost driver - Any activity or series of activities that takes place within an organization and causes costs to be incurred. Cost drivers are used in a system of activity-based costing to charge costs to products or services. Cost drivers are applied to cost pools, which relate to common activities. Cost drivers are not restricted to departments or sections, as more than one activity may be identified within a department.

Cost effective - When a judgment is made that something is economical in terms of the goods or services received for the money spent.

Cost-effectiveness analysis - Analysis of program costs with the purpose of finding the least-cost way to achieve a given result.

Costing - The process of measuring the likely economic consequences of a particular business activity or operation.

Cost minimization - An implication of profit maximization that the firm will choose the method that produces specific output at the lowest attainable cost.

Cost object - Anything for which cost data is desired, e.g., products, product lines, customers, jobs, and organizational sub-units such as departments or divisions of a company.

Cost of capital – 1. rate of return that is necessary to maintain the market value (or stock price) of a firm also called hurdle rate. Or 2. is the rate of return that a business could earn if it so chose other investments with the equivalent risks. Also can be stated as opportunity cost of the funds used due to the investment decision.

Cost of debt - The interest rate times 1 minus the marginal tax rate (because interest is a tax deduction). An increase in the tax rate decreases the cost of debt.

Cost of equity (COE) - The minimum desired rate of return on invested capital that is determined by calculating net income as a percentage of invested capital

Cost of finished goods - Refers to the valuation or cost of manufactured goods as shown in the business's manufacturing account.

Cost of Goods Sold (COGS) - A formula that is used to work out the direct costs associated with the items sold.  It is calculated as opening Inventory plus purchases (an freight in) minus closing inventory. (same as cost of sales)

Cost-plus pricing (full-cost pricing)  - When firms price their product by adding a certain profit or mark-up to average cost or unit cost of the item.

Cost plus pricing – A method of determining payment based on the actual cost of production or service provisioning plus an agreed-upon fee or rate of profit ; for example, a cost-plus government contract.

Cost of Sales - A formula that is used to work out the direct costs associated with the items sold.  It is calculated as opening Inventory plus purchases (an freight in) minus closing inventory. (same as cost of goods sold)

Cost principle (historical cost) - The principle where a company is obliged to record its fixed assets at their actual purchase price or production cost.

Cost-push inflation - Inflation that has its origin in cost increases. This Inflation which occurs as a result of , businesses facing increased costs, which are then passed on to consumers in the form of higher prices.

Cost synergy - The savings in operating costs expected after two companies, who compliment each other's strengths, join.

Cost unit - A functional cost unit which establishes standard cost per workload element of activity, based on calculated activity ratios converted to cost ratios.

Cost volume profit analysis (break even analysis) (CVPA) - Examines the behaviour of total revenue, total costs and profit as changes occur in the output level, selling price and variable costs per unit or fixed costs.

Counter-cyclical policy - The use of fiscal policy and monetary policy to offset, booms and slumps by concretionary and expansionary policies respectively.

Countervailing power - When the power ( monopolistic/oligopolistic seller is offset powerful buyers who can prevent the price from being pushed up.

Coupon rate - The annual interest rate of a bond.

Covenant -  A clause in a contract that requires one party to do, or refrain from doing, certain things. It is usually a restriction on a borrower imposed by a lender.

C.P.A. - certified public accountant.

CPI - Consumer Price Index.

Craft union - A trade union which represents a particular, type of skilled worker.

Credible threat (or promise) - One that is believable to rivals because it is in the threatener’s interests to carry it out.

Creative accounting- A colloquial term used to describe the process of altering or presenting financial information in a way that makes the information more appealing to those to whom it is being shown

Credit - 1. The right hand side of a journal or ledger account entry. 2. Money available for a client to borrow 3. To gain goods or services now and pay in the fututre. 4. To return goods and be given'credit' against fututre purchases.

Credit card - A card authorising purchases on credit at a predetermined interest rate and/or payment conditions.

Credit card receipts - Sales revenue where payment has been made through the use of recognized/authorised credit cards versus cash or check receipts/payments.

Credit control - The process of monitoring and collecting the money owed to a business.

Credit line - The maximum credit that a customer is allowed.

Credit multiplier (Money multiplier): Is a measure of the extent to which the creation of money in the banking system causes the growth in the money supply to exceed growth in the monetary base

Credit note - Is issued when a sales invoice is reversed. i.e. when a customer returns damaged goods a credit note will be issued.  The value of this note can be used against future purchases.

Creditors- Are suppliers that the business owes money to.

Creditors (control account) - The account or record in the general ledger which has the balance of all the amounts outstanding from the purchase ledger.

Creditors days (creditors turnover) - The number of days it takes the company to pay trade creditors. This ratio provides an indication of the amount of credit given to the business by its suppliers. The formula is trade creditors divided by sales multiplied by 365 days.

Credit sales - Merchandise or services sold on the promise to pay later.

Crises - Unstable situations which arise. often in unforeseen circumstances.

Critical path - In an operation which consists of a sequence of activities, this is the one sequence which cannot afford any delays without prolonging the operation.

Critical path analysis - A technique used to find the cheapest or fastest way to complete an  operation.

Cross elasticity of demand - The responsiveness of the demand of one product to a change in the price of another.

Cross-price elasticity of demand – The percentage change in the demand for one good divided by the percentage change in the price of a related good. Cross-price elasticity of demand is a measure of the responsiveness of one good's quantity demanded to changes in a related good's price.

Cross-subsidise - To use profits in one market to subsidise prices in another.

Crowding in - The tendency for an expansionary fiscal policy to increase investment.

Crowding out - The tendency for an increase in government purchases of goods and services to increase interest rates, thereby reducing - or crowding out - investment expenditure.

Crowding-out effect: The offset in aggregate demand that results when expansionary fiscal policy raises the interest rateand thereby reduces investment spending.

Crude (birth/death rate) - Crude rates do not take a . country's age structure into account. Thus, for example, the crude death rate of a developed country may be higher than a developing one due to the higher proportion of old people.

Crude birth rate - The number of births in a y one thousand population e.g. 30 per 1000, the as a 3% birth rate.

Crude death rate - The number of deaths in a year per one thousand population e.g. 10 per 1000, the same as a 1 % death rate.

Culture gap – A difference between the culture that a business has and what it would like it to be.

Cumulative causation – The principle that an initial event can cause an ultim­ate effect that is much larger.

Cumulative earnings - The sum of all earnings over the time periods in question.

Cumulative frequency - The total frequency up to a particular item or class boundary.

Cumulative preferred stock - Preferred stock which gives holder a right to dividends if they have not been paid in a given year.

Currency - The paper bills and coins in the hands of the public.

Currency appreciation - Occurs when the value of a currency rises - it buys more of another currency.

Currency depreciation - Occurs when the value of a currency falls - it buys less of another currency than before.

Currency union - A group of countries (or regions) using a common currency.

Current account - A part of the balance of payments ac­counts that records payments and receipts arising from trade in goods and services and from interest and dividends that are earned by capital owned in one country and invested in another.

Current account balance of payments - Exports of goods and services minus imports of goods and services plus net incomes and current transfers from abroad. If inflows of money (from the sale of exports, etc.) exceed outflows of money (from the purchase of imports, etc.), there is a 'current account surplus' (a positive figure). If outflows exceed inflows, there is a 'current account deficit' (a negative figure).

Current assets - Assets such as cash, stocks and debtors which are only held for short periods of time ( expected to be turned into cash in under a year).

Current balance - The difference between the value of money entering and leaving a country for trade in goods and services income from abroad and transfers.

Current cash / debt ratio - Measures ability to pay current liabilities in given year with cash derived from operating activities. Calculated using net cash from operating activities divided by average current liabilities.

Current cost - The cost which would be incurred for replacement of an asset.

Current cost accounting- A method of accounting which replaces all historic cost values with current valuations.

Current liabilities - Debts that have to be repaid within a year:

Current ratio (working capital ratio) - Measure of liquidity. Current assets are divided by current liabilities. It is a commonly used measure of short-run solvency, i.e., the immediate ability of a firm to pay its current debts as they come due. Current ratio is particularly important to a company thinking of borrowing money or getting credit from their suppliers. Potential creditors use this ratio to measure a company's liquidity or ability to pay off short-term debts. Though acceptable ratios may vary from industry to industry below 1.00 is not atypical for high quality companies with easy access to capital markets to finance unexpected cash requirements. Smaller companies, however, should have higher current ratios to meet unexpected cash requirements. The rule of thumb Current Ratio for small companies is 2:1, indicating the need for a level of safety in the ability to cover unforeseen cash needs from current assets. Current Ratio is best compared to the industry.

Curriculum vitae (resume) - A list of the applicant's personal details, experience and qualifications. .

Custodian - An entity entrusted with guarding and keeping property or records.

Customers - Individuals who buy goods and services supplied by businesses.

Customs - The authorities charged with collecting duty and controlling the entry of merchandise into a country.

Customs and excise - The government department usually responsible for collecting sales tax (e.g.. value added tax (VAT) in the UK).

Customs union/Common market - A group of countries with free trade between them and a common external tariff.

Cut off rate - The predetermined maximum rate and/or minimum rate at which the subject is still acceptable, but where a rate above the proscribed higher or below the proscribed lower rate is no longer acceptable.

Cyclical unemployment (Demand-deficient) - Unemployment resulting from business recessions that occur when total demand is insufficient to create full employment.

Cyclically adjusted deficit (CAD ) - An estimate of the government budget deficit (expenditure minus tax revenue), not as it actually is but as it would be if national income were at its potential level.

Cyclically adjusted surplus (CAS) - The negative of cyclically adjust deficit.