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Definition
An amount that has to be paid or given up in order to get something. In business, cost is usually a monetary valuation of (1) effort, (2) material, (3) resources, (4) time and utilities consumed, (5) risks incurred, and (6) opportunity forgone in production and delivery of a good or service. Allexpenses are costs, but not all costs (such as those incurred in acquisition of an income-generating asset) are expenses.
output
Definitions (3)
1. The amount of energy, work, goods, or servicesproduced by a machine, factory, company, or an individualin a period. 2. Computing: A result produced by a computer that isinternal to the system (from one program or process to another) or external to it (from a program or process to anoutput device) but internal to an output device (modem,monitor, printer, etc.). 3. Contracting: The desired result from a project orcontractor.
sales revenue
Definition
The amount realized from selling goods or services in the normal operations of a company in a specified period.
depreciation
Definitions (4)
1. Accounting: The gradual conversion of the cost of a tangible capital asset or fixed asset into an operational expense (called depreciation expense) over the asset's estimated useful life. The objectives of computing depreciation are to (1) reflect reduction in the book value of the asset due to obsolescence or wear and tear, (2) spread a large expenditure (purchase price of the asset) proportionately
over a fixed period to match revenue received from it, and (3) reduce the taxable income by charging the amount of depreciation against the company's total income. In effect, charging of depreciation means the recovery of invested capital, by gradual sale of the asset over the years during which output or services are received from it. Depreciation is computed at the end of an accounting period (usually a year), using a method best suited to the particular asset. When applied to intangible assets, the preferred term is amortization. 2. Commerce: The decline in the market value of an asset. 3. Economics: The decrease in the economic potential of an asset over its productive or useful life. 4. Foreign exchange: The reduction in the exchange valueof a currency, either by a government or due to weakening of the underlying economy in a floating exchange rate system.
Insurance
Definition
Risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by event(s) beyond the control of the insured party. Under an insurance contract, a party (the insurer) indemnifies the other party (the insured) against a specified amount of loss, occurring from specified eventualities within a specified period, provided a fee called premium is paid. In general insurance, compensation is normally proportionate to the loss incurred, whereas in life insurance usually a fixed sum is paid. Some types of insurance (such as product liability insurance) are an essential component of risk management, and are mandatory in several countries. Insurance, however, provides protection only against tangible losses. It cannot ensure continuity of business, market share, or customer confidence, and cannot provide knowledge, skills, or resources to resume the operations after a disaster
Interest
Definitions (2)
1.
Finance: A fee paid for the use of another party's money. To the borrower it is the cost of renting money, to the lender the income from lending it. Interest on all debt is normally deductible before taxes are assessed on a company's income. Corporate legislation requires disclosure of interest payable on loans, and companies often show a single interest figure in the income statement while providing details in a note that may also include netting out of interest received or some other adjustments. In cost accounting, interest is normally excluded from cost computations on the grounds that (being a payment for capital) it is equivalent to dividend, and hence is a finance item and not a cost item. The rate of interest is usually expressed as an annual percentage of the principal, and is influenced by the money supply, fiscal policy, amount being borrowed, creditworthiness of the borrower, and rate of inflation. the two types of interest are simple interest and compound interest. 2. Law: An advantage, claim, duty, liability, right, and/or title associated with a tangible or intangible item. Legal claim or right in or over an asset or property is called a security interest. Depending on the situation, holding an interest may also be a qualification (such as the requirement of insurable interest for an insurance policy) or disqualification (such as a direct interest in the subject matter of a court case by anyone acting in a judicial capacity)
Rent
Definitions (2)
1. General: Compensation paid by a tenant (or lessee) to the property owner (or lessor) for use or occupancy of a property. 2. Economics: Surplus generated by the supply of any resource (capital, human, natural) over the amount necessary to produce, or bring forth, the quantity of resources supplied. See also economic rent.
Salary
Definition
Agreed-upon and regular compensation for employment that may be paid in any frequency but, in common practice, is paid on monthly and not on hourly, daily, weekly, or piece-work basis.
Wages
Definition
Cost of using labor as opposed to cost of using capital or land. As a price of labor, it is subject to the forces of demand and supply in the labor market, which in turn is affected by productivity levels and ability of the employers to substitute labor with other factors of production such as machinery. See also wage.
Practice
Definitions (2)
1. A method, procedure, process, or rule used in a particular field or profession; a set of these regarded as standard. 2. A business in which a professional or number of associated professionals offer services, such as a law practice or a medical practice.
Costs
Definition
Law: Legal charges, fees, other expenses associated with a lawsuit and, sometimes, punitive charges, assessed and awarded by a court in favor of the prevailing party.
Concept
Definitions (3)
1. Advertising: A briefly stated clear idea around which an ad or marketing campaign is organized. 2. Product development: A clear, detailed description of the attributes and benefits of a new product that addresses the needs of the targeted customers.
3. The reasoning behind an idea, strategy, or proposal with particular emphasis placed on the benefits brought on by that idea. Examples of concepts include the design for a new automobile or the pitch behind an advertising campaign.
Short-term
Definition
Usually one year or less, often used to refer to bonds or loans. Opposite of long-term.
Cost accounting
Definition
A method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected, classified, and recorded. This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible. In contrast to financial accounting (which considers money as the measure of economic performance) cost accounting considers money as the economic factor of production
Firm
Definition
Any business, such as a sole proprietorship, partnership or corporation.
high
Definition
The highest price that was paid for a security during a certain time period.
Variable cost
Definition
A periodic cost that varies in step with the output or the sales revenue of a company. Variable costs include raw material, energy usage, labor, distribution costs, etc. Companies with high variable costs are significantly different from those with high fixed costs. This difference affects the financial structure of the company as well as its pricing and profits. The breakeven point in such companies (in comparison with high fixed cost companies) is typically at a much lower level of output, but their marginal profit (rate of contribution) is also much lower.
Financial structure
Definition
Framework of various types of financing employed by a firm to acquire and support resources necessary for its operations. Commonly, it comprises of stockholders' (shareholders') investments (equity capital), long-term loans (loan capital), short-term loans (such as overdraft), and short-term liabilities (such as trade credit) as reflected on the righthand side of the firm's balance sheet. Capital structure, in comparison, does not include short-term liabilities.
Pricing
Definition
Method adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on the customer's perceived value of the product in comparison to his or her perceived value of the competing products. Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation. See also pricing strategy.
Profit
Definition
The surplus remaining after total costs are deducted from total revenue, and the basis on which tax is computed and dividend is paid. It is the best known measure of success in an enterprise.
Profit is reflected in reduction in liabilities, increase in assets, and/or increase in owners' equity. It furnishes resources for investing in future operations, and its absence may result in the extinction of a company. As an indicator of comparative performance, however, it is less valuable than return on investment (ROI). Also called earnings, gain, or income.
Comparison
Definitions (2)
1. Correspondence between two brokers outlining the terms of a transaction prior to settlement. also called comparison ticket. 2. More generally, an evaluation of two or more things in relation to each other.
Marginal profit
Definition
The excess of marginal revenue over marginal cost. In the bestcase scenario, marginal profit is equal to zero. If, at a given output level marginal revenue is equal to the marginal cost (MR = MC), the marginal profit is zero. This is the most profitable rate of output because all opportunities to make marginal profit have been exhausted. If at an output level the marginal revenue is less than the marginal cost, there will be marginal loss and total profit will be reduced.
Contribution
Definitions (4)
1. General: Imposed or required payment. 2. Accounting: Amount left over after direct (variable) costs are deducted from the sales revenue. Also called gross income, this sum pays for indirect (fixed) costs and contributes to net income. 3. Insurance: Proportional sharing of loss by the insurers when more than one policy is taken by the insured for the same peril. Under a contract of indemnity, the insured cannot profit from his or her misfortune irrespective of the number of policies.
4. Law: Right of a joint debtor (or joint tortfeasor) who pays entirely a debt (or liability) to recover from other joint debtors (or joint tortfeasors) their individual shares of the debt (or liability).
Break-even
Break-even (or break even) is a point where any difference between plus or minus or equivalent changes side. A technique for which identifying the point where the total revenue is just sufficient to cover the total cost. The formula for break even point is fixed costs/fixed expense over contribution per unit. In economics & business, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or a loss has not been made, although opportunity costs have been paid, and capital has received the risk-adjusted, expected return, break even point)
expenses or as the point where total contribution margin equals total fixed expenses.
Manager Definition:
Someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals.
Management Definition:
Coordinating work activities so that they are completed efficiently and effectively with and through other people.