CONTENT ONLINE

CMS GOMTINAGAR

2010-01-13T21:15:00.000-08:00

True education releases capacities, develops analytical abilities, confidence, will power and goal setting competencies and instills the vision that will enable one to become a self motivated agent of social change, serving the best interests of the community.

It is an honour to head an institution like CMS Gomti Nagar. Today our strength stands at 5600. We have come a long way since 1991. This tiny acorn has been nurtured into an Oak by unstinting commitment of the school's Management and faculty.

I take this opportunity to thank our Founder-Manager, Mr Jagdish Gandhi, our Founder-Director, Dr (Mrs) Bharti Gandhi and the Inspectress, Mrs Aruna Varma for their constant guidance and support which has been helping us reach greater heights day by day.

CMS is a great believer in the power of extra-curricular activities and sports in creating a well rounded personality. School is the ideal place to discover and nurture the special talents students possess.

Counselling is made available today in our branch to help the parents and the students.

Our mission is to create world citizens with strength of character and an independent thinking mind to make dreams come true. At CMS Gomti Nagar, we address the child holistically, encourage technological advancement and provide global education ensuring the spiritual and physical growth of our children. The teaching fraternity who I call my TEAM does not require any questions on their caliber. Our results do the talking!!! Humility is our cornerstone.

Dear students, you can meet any challenge and reach your goal with courage and conviction. You can conquer fate and shape your destiny as you wish.

— Manjit Batra

Achievements

Academic Achievements :

Continuing their tradition of triumphs forward, the students of the branch again came out in flying colours in the Board Examinations 2008. 276 students of CMS Gomti Nagar secured above 90% marks in ICSE and ISC Board Examinations 2008. The majority of the students passed these examinations with more than 95% marks in aggregate. In ISC, Yashvardhan Sinha secured the highest, 98.50% and Arushi Garg topped amongst girls securing 97.20% marks. In ICSE, Shubham Mishra and Piyush Gupta topped with 97.20% marks each. Dr (Mrs) Rabab S. Zaidi, the English teacher was declared as the Best Teacher amongst all CMS campuses for the session 2007-2008.

Co-curricular Achievements :

The first prize winners in various contests were Astha Verma in English essay, Parul Srivastava in Hindi essay and Tanya Yadav in painting competition at Wizkid competition organized by Horlicks at the Ravindralaya; students' team of Class XI won second prize in drama contest at 'Expressions' organized by St. Fidelis College, Lucknow; Rohit in Fingersmith and Swapnil in Design.com contest at TECHVISTA 2008 organised by Seth M.R.Jaipuria School, Lucknow; Angarika Dutta in extempore. Arushi Gupta of XI C won the second prize in face painting, and the school team won the third prize in jingles at 'Reflections 2008' organised by Spring Dale College, Indira Nagar. Pre-primary students also won prizes in various contests organized by Spring Dale College — Aadya Sarkar, won first prize in clay modeling, Samiya Khan won third prize in drawing, Kushagra Baghel, won third prize in nursery rhymes quiz and Varnika Sahai, third prize in solo singing.

On Republic Day, the branch put up a dance show 'Desh ki shaan, Bharat desh mahan', won the second prize.

The Commonwealth Youth Conference was organized at its huge auditorium on 17 March 2008. A poster making competition for students of junior and senior classes was organized for the students on this occasion.

The branch organized the International Young Mathematicians' Convention, IYMC 2008 for students from 2 to 5 December 2008. Around 450 budding mathematicians from 14 countries of the world gathered here to participate in this international convention.

A student delegation of the branch comprising students Yash Upadhyay, Avantika Pandey, Ananya Chaudhary and Palash Chandra went to Hamburg, Germany under the leadership of Mrs Ankita Sharma to participate in the month-long CISV camp held there. Another delegation comprising leader, Ms Samyukta Sapru and student members, Dhruv Joshi, Shivam Shukla, Joohi Kumar and Aarti Singh participated in CISV camp held in Verona, Italy. The third CISV delegation of the branch comprising student members, Vaibhav Aggarwal, Vaibhav Narain, Angel Dixit and Ananya Singh and teacher, Dilpreet Kaur participated in the camp held at Rogaland, Norway.

A 6-member delegation led by Mrs Mita Chatterjee went to Hong Kong to participate in the International Mathematics Olympiad organized by Po Leung Kuk Society from 11 to 16 July 2008. A delegation led by Ms Manjit Batra, Principal participated in ICSQCC 2008 at Istanbul, Turkey. Ms Priyanka Bharadwaj teacher and Peace Promoter attended a Global Peace Conference held in Taiwan.

A delegation led by Mr Abhishek Pandey participated in the International Maths Competition 2008 held in Chiang Mai, Thailand. Another delegation comprising leader, Mr Sumit K. David went to Japan with a team of students to participate in the 4th Science Fair.

Jay Vishwanath Pandey, IX H won the trophy in Quiz in International Geofest'08 organised by CMS Mahanagar (III) at CMS Kanpur Road in November 2008. Now he will participate in International Geofest 2009 in Mexico City (Mexico).

In the Republic Day Parade 2009 the branch students won second prize for "Bhangra dance".

Sports Achievements :

The brilliant sports stars of the branch were Hameer Deo, Shashank Shekhar, Pranjay Kumar and Abhijeet Upadhyay who won first prize in shot put and 4x100m relays at the inter-branch Athletic Meet organized by CMS Inspection Department from 25 to 29 August at Chowk stadium. Aaditya Goel, Aaditya Raj and Piyush Pallav won first prize in District Inter-School Table Tennis competition organized by Maharaja Agrasen Inter College, Lucknow, on 10 September 2008. Piyush Pallav, Aaditya Raj and Aaditya Goel won third prize in Team Championship at the State level Table Tennis competition organized by Dr Bhimrao Ambedkar State School of Sports in Faizabad, U.P. from 28 to 30 September 2008. Talented swimmers of the branch, Shubham Pandey and Aruna Elangovan participated in the State level swimming competition held in Allahabad on 2 October. While Shubham won the third prize in 100m freestyle and second prize in 4x100m freestyle relay, Aruna won first prizes in 100m freestyle, 50m back stroke and 100m back stroke and a second prize in 50m freestyle. Aruna was declared Individual Champion and Best Swimmer for winning 4 gold and one silver medal. Shashank Shekhar won third prize in shot put at EXSPO 2008 organised by CMS RDSO.

Office Bearers

HEAD OF THE COUNCIL
Angarika Dutta

HOPE HOUSE
Captain : Avantika
Prefect : Aaman Kidwai
Prefect : Vasundhra

LOVE HOUSE
Captain : Ashish Singh
Prefect : Syed Danish Hasan
Prefect : Sonali Chawla

PEACE HOUSE
Captain : Pramita Singh
Prefect : Vatsal Chandra
Prefect : Dhoopa Singh

UNITY HOUSE
Captain : Syed Umair Husain Naqvi
Prefect : Aakash Gautam
Prefect : Swati Tandon

Biography of Charlie Chaplin

2009-12-29T09:29:00.000-08:00

Date of Birth : 16 April 1889, Walworth, London, England, UK
Date of Death : 25 December 1977, Vevey, Switzerland (natural causes)
Birth Name : Charles Spencer Chaplin
Nickname : Charlie Charlot, The Little Tramp
Height : 5' 5" (1.65 m)

Biography
Charles Chaplin's parents, Charles and Hannah Chaplin, were music hall entertainers. His first stage appearance, at age five, was singing a song in place of his mother who had become ill. At eight he toured in a musical, "The Eight Lancaster Lads". Nearly 11, he appeared in "Giddy Ostende" at London's Hippodrome. From age 17 to 24 he was with Fred Karno's English vaudeville troupe, which brought him to New York in 1910, aged 21. In November of 1913 he signed a contract with Mack Sennett at Keystone and left for Hollywood the next month. His first movie, Making a Living (1914), premiered in February of 1914. He made 35 films that year, moved to Essanay in 1915 and did 14 more, then jumped over to Mutual for 12 two-reelers in 1916 and 1917. In 1918 he joined First National (later absorbed by Warner Bros.) and in 1919 formed United Artists along with Douglas Fairbanks, Mary Pickford and D.W. Griffith. His first full-length film was The Kid (1921); his first for UA, which he produced and directed himself, was A Woman of Paris: A Drama of Fate (1923). In 1929, at the first Oscar awards, he won a special award "for versatility and genius in writing, acting, directing and producing" The Circus (1928). In 1943 he was accused of fathering a child; the papers made much of the scandal, but it was proved in a court trial that he was not the father. The same year he entered his fourth marriage, to Oona Chaplin, daughter of playwright Eugene O'Neill. They had eight children. Tired of political and moralistic controversies and plagued with tax problems, he left the United States for Switzerland in 1952. He published his memoirs in 1964. In 1972 he returned to Hollywood to claim a special Oscar honoring his lifetime contributions to movies. He was named Knight Commander of the British Empire in 1975. He died in his sleep from old age.

Nawab Sirajuddaula

2009-12-29T08:47:00.000-08:00

Sirajuddaula was the last nawab of Bengal. After the battle of Palashi (23 June 1757) in which Sirajuddaula was defeated and subsequently murdered, the British became the virtual masters of Bengal, reducing the later nawabs to mere puppets in their hands. Mirza Muhammad Sirajuddaula was the grandson of Nawab alivardi khan and son of amina begum and zainuddin ahmad khan. He was born in 1733 and soon after his birth Alivardi Khan was appointed as the deputy governor of Bihar. So Sirajuddaula was regarded as a 'fortune child' in the family and his grandfather had special affection and favour for him. It is stated that Alivardi had given his heart to Sirajuddaula from the day of his birth and 'never kept him apart from himself'.
Early years
Siraj's father Zain Uddin was the ruler of Bihar and his mother Amina Begum was the youngest daughter of Nawab Ali Vardi Khan. Since Nawab Ali Vardi had no son, Siraj, as his grandson, became very close to him and since his childhood was seen by many as successor to the throne of Murshidabad. Accordingly, he was raised at the nawab's palace with all necessary education and training suitable for a future nawab. Young Siraj also accompanied Ali Vardi in his military ventures against the Marathas in 1746.
Ali Vardi Khan in 1752 officially declared his grandson Crown Prince and successor to the throne, creating no small amount of division in the family and the royal court.
Reign as Nawab
Mirza Mohammad Siraj succeeded Ali Vardi Khan as the Nawab of Bengal in April 1756 at the age of 23, and took the name Siraj-Ud-Daulah. Siraj-Ud-Daulah's nomination to the nawabship aroused the jealousy and enmity of Ghaseti Begum (the eldest sister of Siraj's mother), Raja Rajballabh, Mir Jafar Ali Khan and Shawkat Jang (Siraj's cousin). Ghaseti Begam possessed huge wealth, which was the source of her influence and strength. Apprehending serious opposition from her, Sirajuddaula seized her wealth from Motijheel Palace and placed her in confinement. The Nawab also gave high government positions to his favourites. Mir Mardan was appointed Bakshi (Paymaster of the army) in place of Mir Jafar. Mohanlal was elevated to the post of peshkar of his Dewan Khana and he exercised great influence in the administration. Eventually Siraj suppressed Shaukat Jang, governor of Purnia, who was killed in a clash.
Black Hole of Calcutta
He, as the direct political disciple of his grandfather, was aware of the global British interest in colonization and hence, resented the British politico-military presence in Bengal represented by the British East India Company. He was annoyed at the company's alleged involvement with and instigation of some members of his own court in a conspiracy to oust him. His charges against the company were mainly threefold. Firstly, that they strengthened the fortification around the Fort William without any intimation and approval; secondly, that they grossly abused the trade privileges granted to them by the Mughal rulers, which caused heavy loss of customs duties for the government; and thirdly, that they gave shelter to some of his officers, for example Krishnadas, son of Rajballav, who fled Dhaka after misappropriating government funds. Hence, when the East India Company started further enhancement of military preparedness at Fort William in Calcutta, Siraj asked them to stop. The Company did not heed his directives, so Siraj-Ud-Daulah retaliated and captured Kolkata (Shortly renamed as Alinagar) from the British in June 1756. During this time, he is alleged to have put 146 British subjects in a 20 by 20 foot chamber, known as the infamous Black Hole of Calcutta; only 23 were said to have survived the overnight ordeal. The real facts around the incident are disputed by later historians, but at that time the lurid account of this incident by one survivor – Holwell – obtained wide circulation in England and helped gain support for the East India Company's continued conquest of India.
The Battle of Plassey
The Battle of Plassey (or Palashi) is widely considered the turning point in the history of India, and opened the way to eventual British domination. After Siraj-Ud-Daulah's conquest of Calcutta, the British responded by sending fresh troops from Madras to recapture the fort and avenge the attack. A retreating Siraj-Ud-Daulah met the British at Plassey, but betrayed by a conspiracy hatched by Jagat Seth, Mir Jafar, Krishna Chandra, Umi Chand etc, he lost the battle and had to escape. He went first to Murshidabad and then to Patna by boat, but was eventually arrested by Mir Jafar's soldiers. Siraj-Ud-Daulah was executed on July 2, 1757 by Mohammad Ali Beg under orders from Mir Jafar.
The character of Siraj-Ud-Daulah
Sirajuddaula's limitations and his public and private character should be judged considering the environment he worked in and the cause he fought for and gave his life. A marked change in his character was noticeable after he had become the nawab. Alivardi's last advice might have acted as a great influencing factor on him. The verdict of history is that whatever might have been his fault, Sirajuddaula neither betrayed his master nor sold his country. 'The name of Sirajuddaula stands higher in the scale of honour than does the name of Clive. He was the only one of the principal actors who did not attempt to deceive'.
Ghulam Husain Salim wrote :
"Owing to Siraj ud Dowla’s harshness of temper and indulgence, fear and terror had settled on the hearts of everyone to such an extent that no one among his generals of the army or the noblemen of the city was free from anxiety. Amongst his officers, whoever went to wait on Siraj ud Dowla despaired of life and honour, and whoever returned without being disgraced and ill-treated offered thanks to God. Siraj ud Dowla treated all the noblemen and generals of Mahabat Jang [Ali Vardi Khan] with ridicule and drollery, and bestowed on each some contemptuous nickname that ill-suited any of them. And whatever harsh expressions and abusive epithet came to his lips, Siraj ud Dowla uttered them unhesitatingly in the face of everyone, and no one had the boldness to breath freely in his presence."'
Ghulam Husain Tabatabai had this to say about him:
"Making no distinction between vice and virtue, he carried defilement wherever he went, and, like a man alienated in his mind, he made the house of men and women of distinction the scenes of his depravity, without minding either rank or station. In a little time he became detested as Pharaoh, and people on meeting him by chance used to say, ‘God save us from him!'"

BIOGRAPHY OF SUBROTO ROY SAHARA

2009-09-08T07:04:00.000-07:00

Subrata Roy Sahara (Born 10 June 1947 at Araria 40 km. North to Poornia, Bihar) is the chairman and Managing Worker of the Sahara Group of companies based in India. Chairman of the Sahara Group, he is the head of the $10bn (£5.5bn) Sahara Group. Sahara Group has interests in banking, aviation, media and housing. Subroto Roy began his journey in 1978, when he founded Sahara in 1978 with three workers in the northern state of Uttar Pradesh as a small deposits para-banking business. From an asset base of USD 43 in 1978 when it was founded, the group has today exponentially grown to become a conglomerate with assets having a Market Value of more than INR 2,15,000 crores (USD 50 billion). Today, the group has diversified into a giant business conglomerate with interests in housing, entertainment, media and aviation. Sahara Group presently runs a private airline, entertainment and news television channels, a newspaper, and claims to own some 33,000 acres of real estate across India. It also sponsors the Indian cricket and hockey teams and intends to move into life insurance, housing finance, consumer products, sportswear, and healthcare. Sahara Group has come up with one of the most prestigious real estate projects in India, namely Amby Valley Project. The project boasts some of the biggest name in Indian entertainment and sports arena as well as some former international Olympic medal winners as its brand ambassadors. Sahara Airline was recently in news for its merger with Jet Airlines. But the deal fell through.Sahara Group has a huge complex in Lucknow, Uttar Pradesh. The complex is known as Sahara City. Subrato Roy is famous for his flamboyant lifestyle. The wedding of his two sons became talk of the town. The who's who of Indian elite attended it and its expenditure ran into hundreds of crores. Subroto Roy calls himself as the group's "chief guardian".

SAHARA'S BID FOR LIVERPOOL FOOTBALL CLUB

New Delhi, Feb 9: Indian business tycoon Mukesh Ambani was quick to dismiss reports claiming that he was one among two Indians bidding for acquisition of Liverpool football club.
Buzz up!Reliance on Tuesday, Feb 9 denied the report published in a British newspaper.
"There is no truth to the report. We deny it completely," Reliance spokeswoman Sudeep Purkayastha said.
The Times of London reported earlier that Mukesh Ambani, chairman of Reliance Industries and Subroto Roy, chairman of Sahara Group are bidding for a 51 per cent stake in the English football club.
However, there is no denial from Subrata Roy's Sahara Group.
"We are presently not in a position to comment," Sahara spokesman Abhijit Sarkar is quoted as saying in latest reports.
Liverpool, which is one of England's most successful football clubs, is presently owned by George Gillett and Tom Hicks.
The American duo acquired the club in 2007.
Informing of the disagreements between Gillett and Hicks, The Times reported that Liverpool club emerged as a takeover target for Ambani, the seventh-richest man in the world, as pressure mounted on Hicks and Gillett to seal a deal and sell the club.

COMMERCE VOCABULARY

2009-09-04T12:37:00.000-07:00

THIS POST LACKS PROPER TEXT FORMATTING. TO GET A FORMATTED (.PDF) VERSION OF THIS POST CLICK HERE

Acceptance The drawee’s acknowledgement of the LIABILITY on a BILL OF EXCHANGE, in writing on the instrument itself. A bill may also bear the co-acceptance by a bank, which is a guarantee to honour the instrument in the event of default by the drawee.

Accommodation Bill
A BILL OF EXCHANGE without any consideration, or quid pro quo. In this case, a person signs a bill and makes himself liable, without receiving any value in return, such as, an advantage or a benefit. The purpose of accepting such a bill is to accommodate the drawer who is temporarily in need of funds. The acceptance enhances the LIQUIDITY of the instrument, which can be discounted by the drawer with a bank.

ACCOUNT (A/C)
1 - A business keeps accounts for all its business transactions. The
accounts are in the ledgers of the business. In the nominal ledger
the word account is often shortened to A/C. For example, sales A/C,
drawings A/C.. Every different type of transaction needs an account.
Businesses may open accounts such as :
(a) bank account and cash account (in the cash book);
(b) personal accounts for goods which the business has sold to credit
customers (in the sales ledger);
(c) personal accounts for suppliers of goods on credit to the business
(in the purchases ledger);
(d) accounts for capital, liabilities, assets, expenses and revenue (in
the nominal ledger).
2- The word account sometimes means a statement which shows
the money that a person owes to a business. The account is a
record of the transactions that the person has made with business,
since the date of the last account.

ACCOUNTANCY
Accountancy is the name for all the subjects that accountants study and in which they should be experts, For example, accounting, book-keeping, cost accounting, taxation, auditing, management accounting etc.

ACCOUNTANT
An accountant is a person who studies the financial information of a business; and gives financial advice to the business.
1- The accountant checks that the financial information in the books of
the business is correct.
2- He advises a business which is the most useful accounting system
for that business, e.g. a large business may need to buy
mechanised accounting equipment, or use a computer.
3- He prepares a financial statement which shows the financial position of the business (this is called a balance sheet). The balance
sheet must show a true and fair picture of the business.
4- The accountant prepares a financial statement (called a profit and
loss account), which shows the revenue and expenses of a business
for a financial period, and the profit or loss which results.
5- In a large company he gives financial information which will help
management to run the business and plan for the future.

ACCOUNTING
There are two main kinds of accounting:
(a) financial accounting;
(b) management accounting (including cost accounting).
Financial accounting is about the proper way to record all the assets and liabilities of a business, and transactions with the outside world. The financial statements which the accountant prepares give useful information about the business for shareholders and investors, bankers, creditors, customers and government departments.
Management accounting provides useful information for management to help them to control the business and to make decisions:
For example, how much does it cost to make product A? Should the business make product A or product B?
Should the business buy another machine? Will the business make a profit if it sells product C at Rs. 40?

ACCOUNTING DATA
Accounting data is another name for accounting information and facts.
The owner of a business and other people need to know the financial position of a business. They find this from the accounting information which the business keeps.
The accounting data of a business includes information and other facts about:
1- goods which a business has bought and sold;
2- goods which a business has produced;
3- the number of hours employees have worked;
4- the amount of wages and expenses;
5- the assets, liabilities and capital of the business.

Accounts Payable (A/P)
Amounts owed by one organisation top another in respect of goods or services purchased. Accounts Payable is classified as a Current Liability because the obligation is generally due within 12 months from the initial transaction date

Accounting Period
A term covered by a profit and loss account. A financial year is any 12-month accounting period that a business chooses to adopt as opposed to the calendar year, which runs from January 1 to December 31
Accrual
Adjustment made at the end of an accounting period to recognise expenses that have been incurred during the period but for which no invoice has yet been received
Accrual Basis
A method of accounting that recognizes revenues and expenses as they accrue, even though cash would not have been received or paid during the accrual period.

ACCRUED EXPENSE
An accrued expense is an expense which a business pays for after the end of the accounting period (or financial year); but the business used it before the end of the accounting period.

Accrued interest
The interest due on a bond since the last interest payment was made. The buyer of the bond pays the market price plus accrued interest.

ACID TEST RATIO
A financial ratio which compares the quick assets (current assets less stock) with the current liabilities. Quick assets are assets which a business can convert into cash within 6-12 weeks. The ratio is used as an important
indicator of the ability of the business to pay its debts as they become due. It is usually considered more important for this purpose than the current ratio, because the acid test ratio ignores stock which may not be quickly turned into cash. The ratio is quoted as a number.

The formula is :
Current assets – Stock
ACID TEST RATIO = ____________________
Current liabilities

E.g. If the ratio is 150/100 = 1.5 times, then the quick assets are more than the current liabilities. The business should be able to pay its immediate liabilities.
The acid test ratio is usually less than the current ratio, because the current ratio includes stock. Stock normally takes longer to turn into cash than the other items.
The ratio is also called 'the quick ratio' and the 'liquid ratio'.

Adam Smith
(Born 1723 - Died 1790)
Regarded as the father of modern Economics. Author of well known book ‘Wealth of Nations’.

ADDITIONAL CAPITAL
Additional capital is extra capital. For example, Mr. Ram started business with Rs. 6000 capital. Six months later he put Rs. 2000 more into the business.
Therefore he put in additional capital of Rs. 2000. The business now has Rs. 8000 capital.

ADMINISTRATIVE EXPENSES
These are expenses of a business. They include manager's salaries, legal charges, and accounting charges, secretaries' and book-keepers' wages, office expenses, printing and stationary, telephone and postage etc.
Administrative expenses are one of the four main types of expenses in the profit and loss account. These are: manufacturing expenses; trading expenses; administrative expenses; selling and distribution expenses.

ADVANCE PAYMENT
A business sometimes pays for a service before it consumes it. This is an advance payment.
For example, Mr. B opened a new shop on 1 January, 1999. But, in December 1998, he paid the rent for the shop for the month of January 1999. He paid the rent before he used the shop. He made an advance payment.

ADVERTISING
A business often wants more people to buy its goods. The business advertises its goods. It gives information about them in newspapers, on television, in the street. This is called advertising. It is an expense item in the profit and loss account.

AGENT
An agent is someone who sells goods for another person or business or acts on behalf of another person or business. The agent does not own the goods he sells. He has an agency for these goods.
For example, A garage which sells petrol may be an agent for Bharat Petroleum. The garage also sells Ashok Leyland cars, so it is also an agent for Ashok Leyland.
Agents receive money from the owner of the goods; this is a percentage of the sales that the agent has made. This is called commission.

Allotment
The acceptance of an application subscribing to the shares or other securities of a company. Such allotment establishes the contractual relationship that underlies an investment through public subscription.

ALLOWANCE
A business sometimes gives an allowance to a customer. This means that the customer pays less money for goods.
For example, Mr. X buys a new car from a garage. The car costs Rs. 300000. After he has bought the car he finds that the back seat is damaged. Because of this the garage lets Mr. X buy the new car Rs. 290000. Therefore, the garage has given Mr. X an allowance of Rs. 10000.
Allowance sometimes means a small sum of money which a person receives regularly. He does not work or sell anything for this money. It is a gift.

AMOUNT
An amount is a quantity or number of things, or money.
For example, 1. Mr. L bought a large amount of oil for his office heating. He bought 500 litres of oil. (Here amount = quantity of oil.)
2. Mr. X owed a large amount to the Car Components Company. This business had supplied 400 car tyres to Mr. X which cost Rs. 40000. Mr. X paid half the amount (Rs. 20000) in cash and half the amount by cheque. (Here amount = money.)

AMOUNT OUTSTANDING
A person or business may owe money to another person or business for goods supplied or services received. If the person (or business) does not pay what he owes, or only makes a part payment before the end of the month, or the date of the balance sheet then the money still owing is called the amount outstanding.
Amount outstanding applies to both :
(a) the money owed BY the business TO someone else, and
(b) the money owed TO the business BY someone else.

ANNUAL (FINAL) ACCOUNTS
The annual accounts are the accounts which a business prepares once every year at the end of the accounting period.
Annual payments are payments which a business makes once every year.

ANNUAL GENERAL MEETING
A limited liability company must hold an annual general meeting each year.
At this meeting the shareholders meet to do many things :
1- They receive the balance sheet and the profit and loss account.
2- They receive a report from the directors and the auditors.
3- They approve the amount of dividend that the company should pay
out on its shares.
4- They choose directors and auditors.
5- They decide the amount of money that the directors and auditors
should receive (this is sometimes called remuneration).

ANNUITY
A fixed sum of money which a person receives as income during his lifetime or for a fixed number of years.

APPRECIATION
Some fixed assets do not lose their value as they get older, e.g. land. Its
value increases.
For example, Land bought in 1990 for Rs. 10000 may have a value in 1999 of Rs. 18000. Therefore this does not depreciate in value; it appreciates in value by Rs. 8000. This is called appreciation.
If a business revalues its assets because appreciation has taken place, the accountant adds the amount of appreciation to both the fixed asset account and a reserve account.

APPROPRIATION ACCOUNT
A part of the profit and loss account which shows how a business shares the calculated profit amongst the owners.

ARREARS
1- An arrear is a debt that is due and unpaid.
2- When a person has not paid his account by the correct date, his
account is in arrears. For example, Ram should pay his rent on 1
February. This is the due date. If Ram has not paid his rent on 1
February, the rent is in arrears. If he has not paid the rent on 8
February, it is one week in arrears. If he has not paid the rent by 1
April, the rent is 2 months in arrears.
3- An amount may be payable in arrears. This means the amount is
not due for payment until the end of a period of service. For example,
Kishan agrees to pay rent for his shop every (three months in arrears.
This means that he will pay the rent for January, February and March
on 31 March).

ASSETS (1)
Assets are all the valuable things which a business owns. They are the resources of the business. They are any property of the business which has a monetary value.
Assets include land, buildings, plant and machinery, vehicles, fixtures and fittings. These are fixed assets.
Assets also include : stocks of goods for resale, cash, money in the bank, and debts which customers and other people owe to the business. These are called current assets.
In a balance sheet it is most important that the accountant should state how he has valued the assets, For example, asset at cost, replacement cost or valuation.

Assets (2)
Everything a corporation owns or that is due to it: cash, investments, money due it, materials and inventories, which are called current assets; buildings and machinery, which are known as fixed assets; and patents and goodwill, called intangible assets.
Auditor’s report – Often called the accountant’s opinion, it is the statement of the accounting firm’s work and its opinion of the corporation’s financial statements, especially if they conform to the normal and generally accepted practices of accountancy.
Assets (3)
Anything of value. Any interest in real or personal property which can be appropriated for the payment of debt.

Assets (4)
Possessions that have economic value some of which may provide an economic and/or financial return)

ATM (Automated Teller Machine)
An ATM allows bank customers to deposit and withdraw money without the direct assistance of a bank employee.

Audit
An examination of financial accounts and records in order to assure compliance with accounting rules and regulations, prevent and detect fraudulent activity and to review efficiency of financial operations

AUDITOR
An auditor is a special kind of accountant who is independent of the business that he is working for. His job is to check that the accounts of a company are correct and that the company has prepared the accounts in the way that the law requires. By law an auditor must check the accounts of companies. The auditor must try to make sure that the accounting system makes it difficult for employees to steal goods or money from the business.
Auditors must be professionally qualified accountants. They must report to the members of the company.

AUTHORISED SHARE CAPITAL
When a limited liability company wishes to issue shares it must apply to the Registrar of Companies. The people who form the company tell the Registrar how many shares the company wishes to issue. They also say what the name and nominal value of the shares will be.
For example, 10000 ordinary shares at Rs. 50 each, 5000 preference shares at Rs. 100 each.
These shares are called the authorised share capital (or nominal capital). The company pays an amount of duty, calculated on the amount of the shares.
Directors sometimes do not sell all the authorised share capital. The shares that they sell are called the issued share capital. If the directors sell all the shares, the authorised share capital is the same as the issued share capital.

Automatic stabilisers
Under certain spending and tax rules, expenditures that automatically increase or taxes that automatically decrease when economic conditions worsen, therefore, stabilising the economy automatically.

Autonomous change
A change in the values of variables in a macroeconomic model caused by a factor exogenous to the model.

Autonomous expenditure multiplier
The ratio of increase (or decrease) in aggregate output or income to an increase (or decrease) in autonomous spending.

Average cost
Total cost per unit of output.
Average fixed cost
Total fixed cost per unit of output.
Average product
Output per unit of the variable input.
Average revenue
Total revenue per unit of output.
Average variable cost
Total variable cost per unit of output.

BAD DEBT (1)
Sometimes a debtor does not pay what he owes. The business must write off the amount as a bad debt.
The accountant removes the debt from the asset account.
1- He credits the debtor's account.
2- He debits the expense account of bad debts.
3- He transfers the total of bad debts for the period to the profit and
loss account. This is an expense of the business.

Bad Debt (2)
A debt that is not collectible and is therefore worthless to the creditor.

BALANCE
A balance is the difference between one side of an account and the other.
Debit = Loss
Credit = Gain.
Balanced budget
A budget in which taxes are equal to government spending.

BALANCE IN HAND
A balance in hand is a debit cash balance. It shows that a business possesses an asset of cash.
Balanced budget multiplier
The change in equilibrium output that results from a unit increase or decrease in both taxes and government spending.

Balance of payments
A set of accounts that summarise a country’s transactions with the rest of the world.

BALANCE SHEET (1)
The balance sheet shows the financial position of a business on one particular day. A business usually prepares a balance sheet once a year.
The balance sheet shows the capital, liabilities and assets of a business.

Balance Sheet (2)
A statement of the financial position of an enterprise, as on a certain date, and in a certain format showing the type and amounts of the various ASSETS owned, LIABILITIES owed, and shareholder’s funds.

Balance Sheet (3)
Financial statement presenting measures of the assets, liabilities and owner’s equity or net worth of business firm or nonprofit organization as of a specific moment in time.

Balance Sheet (4)
Statement of a company’s assets and liabilities at a specific date

Balance sheet (5)
A condensed financial statement showing the nature and amount of a
company’s assets, liabilities and capital on a given date. In dollar amounts, the balance sheet shows what the company owned, what ait owed and the ownership interest in the company of its stockholders.

BALANCING FIGURE
Another name for the balance.

BANK CASH BOOK
A cash book which deals with bank and cash transaction of the business. It is a book of prime entry.

BANK CHARGES
Banks make financial transactions for their customers. Banks charge money for this. Usually banks deduct the bank charges from the customer's bank account at regular intervals of time, usually twice a year.
A business can find the amount of bank charges from the bank statement.
Bank charges are an expense of a business.

Bank Guarantee
The financial guarantees and performance guarantees issued by banks on behalf of their clients. A financial guarantee assures repayment of money. (For example, an advance received on an electrification contract), in the event of non-completion of the contract by the client. A performance guarantee provides an assurance of compensation in the event of inadequate or delayed performance on a contract. A deferred payment guarantee promises payment of installments due to a supplier of machinery or equipment.

BANK OVERDRAFT
A man has Rs. 25000 in the bank. He has debts of Rs. 30000. He goes to his bank and makes arrangements with the bank. The bank will then let him pay out cheques on his account of up to a maximum of Rs. 15000, for example.
The man pays out cheques for Rs. 30000. Therefore, he has a bank overdraft. He owes Rs. 5000 to the bank, and he may write out cheques for another Rs. 10000 if he needs to.
Banks sometimes let customers have a large bank overdraft for a long time. Banks charges interest for this service, and sometimes need to have a security.

Bank rate (1)
The rate of interest payable by commercial banks to RBI. If they borrow money from the latter in case of a shortage of reserves.

Bank Rate (2)
The rate of interest charged by the Reserve Bank of India (RBI) on financial accommodation extended to banks and FINANCIAL INSTITUTIONS. The support is provided in the form of bills rediscounting facility and advances or REFINANCE against specified ASSETS (e.g. TREASURY BILLS and DATED SECURITIES) or PROMISSORY NOTES.

BANK RECONCILIATION
A business needs to check that the balance in the cash book is the same as the balance on the bank statement.
There may be four types of differences :
1- Items in the payments side of the cash book are not on the bank
statement. These are usually unpresented cheques.
2- Items on the receipts side of the cash book are not on the bank
statement. These are called cheques not created, or lodgements
not credited.
3- Payments on the bank statement are not in the cash book.
4- Receipts on the bank statement are not in the cash book.
The business should enter numbers 3 and 4 in the cash book and correct any other errors.

BANKRUPT
A bankrupt is someone who fails in business and loss money and is unable to pay his debts.

BANKRUPTCY
When a business is unable to pay its debts it goes into bankruptcy.
A professional accountant or government official will take possession of all the assets of the business. He will turn them into cash and share out the proceeds among all the creditors of the business.

BARTER
Barter is a very simple form of trade. Very simple societies use it. People do not use money. They exchange valuable items.
For example, A has six cows. He wants a goat. B has a goat. He wants some cows. Therefore A and B decide how many cows equal how many goats. When they agree they exchange the cows for the goats. This is barter.

Barter exchange
Exchange of commodities without the mediation of money.
Base year
The year whose prices are used to calculate the real GDP.

BILL OF EXCHANGE (1)
Sometimes debtors take a long time before they pay what they owe to a business. The business can obtain the use of this money if it draws up a bill of exchange. The bill of exchange says that the debtor must pay what he owes by a certain date.
The business sends the bill to the debtor. The debtor signs and returns it.
Bills of Exchange (2)
A credit instrument that originates from the creditor (drawer) on which the DEBTOR (drawee) acknowledges his LIABILITY; after such acceptance, the drawer may get the bill discounted, so as to realize the proceeds immediately.

Bear (1)
A person who expects share prices in general to decline and who is likely to indulge in SHORT SALES.

Bear (2)
Someone who believes the market will decline.

Bear Market (1)
A long period of declining security prices. Widespread expectations of a fall in corporate profits or a slowdown in general economic activity can bring about a bear market.

Bear market (2)
A declining market.

Blue Chip (1)
A share of a company that is financially very sound, with an impressive track record of earnings and DIVIDENDS, and which is highly regarded for its competent management, quality products and/or services. Examples in India are Hindustan Lever, Gujarat Ambuja Cements, and Reckitt & Colman among others.
Blue chip(2)
A company known nationally for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends.

BOND (1)
A document, deed or certificate which a government or company issues. The bond states that a person has lend money to the government or company and that they will pay it back with interest.

bonds (2)
A paper bearing the promise of a stream of future monetary returns over a specified period of time. Issued by firms or governments for borrowing money from the public.

Bond (3)
A long-term debt instrument on which the issuer pays interest periodically, known as ‘Coupon’. Bonds are secured by COLLATERAL in the form of immovable property. While generally, bonds have a definite MATURITY, ‘Perpetual Bonds’ are securities without any maturity. In the U.S., the term DEBENTURES refers to long-term debt instruments which are not secured by specific collateral, so as to distinguish them from bonds.

Bond (4)
Bond is a certificate of indebtedness issued by a government or a company, promising to repay borrowed funds to the lender at a fixed rate of interest and at predetermined intervals.
BONUS
1- A special extra payment given to employees when they have
produced more than a certain amount in a fixed period.
2- It is an extra issue of shares (called bonus shares).

BOOK VALUE (1)
Fixed assets often lose their value as they get older and the business uses them up. Accountants provide an amount of depreciation each year on these assets. They deduct a percentage of the value of the asset. They charge this as an expense of the business.
The balance sheet shows fixed assets at cost price less depreciation. The balance is the book value or written-down value of the asset.
Example : Rs.
Motor van at cost 2500
Less depreciation to date 500 ____
2000
____
2000 is the book value of the motor van.

Book Value (2)
It is the amount of NET ASSETS that would be available per EUQITY SHARE, after a company pays off all LIABILITIES including PREFERENCE SHARES from the sale proceeds of all its ASSETS liquidated at BALANCE SHEET values.

Book Value (3)
The value at which an asset is shown in the company’s books/balance sheet
Book value (4)
An accounting term. Book value of a stock is determined from a company’s
records, by adding all assets then deducting all debts and other liabilities, plus the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding and the result is book value per common share. Book value of the assets of a company or a security may have little relationship to market value.

Borrower
An individual, business or government that has received and used something belonging to somebody else, with the intention of returning or repaying it - often with interest in the case of borrowed money

BRANCH ACCOUNT
Some big businesses have many shops in different parts of the country, For example, Bata Shoe Company, Khadi Gandhi Ashram etc. Each separate shop is called a branch . Each branch keeps its own account called branch account.

BREAK-EVEN POINT (1)
A business needs to know to what amount of money that it receives from sales will be same amount of money that it spents in expenses. This amount is called the break even point, the point at which it does not make either a profit or a loss.

Break-even point (2)
Break-even point is the point on the supply curve at which a firm earns normal profit.
Break-even Point (3)
The point where the revenues from a business operation equal the total costs (FIXED COSTS = VARIABLE COSTS). Thus, a profit accrues when revenues exceed the break-even point. The break-even volume is computed by dividing the fixed costs (FC) by the difference between the selling price per unit (SP) and variable cost per unit (VC).

Bridge Loan
Short-term loan to provide temporary financing until more permanent financing is available.
Broad money
Narrow money + time deposits held by commercial banks and post office savings organisation.
Broker
An agent who handles the public’s orders to buy and sell securities, commodities or other property. A commission is charged for this service.

Budget (1)
A financial plan that projects receipts and payments of an entity covering a specific period of time, usually one year. Its primary purpose is to achieve financial control. Budgets could be distinguished on the basis of time span, function and flexibility. For instance, budgets may be short-term or long-term; similarly, there are Sales Budgets, Cash Budgets, Capital Expenditure Budgets and other to cover different functions.

Budget (2)
Budget is a plan to manage income, spending and saving

Budget line
Budget line consists of all bundles which cost exactly equal to the consumer’s income.
Budget set
Budget set is the collection of all bundles that the consumer can buy with her income at the prevailing market prices.

BUILDING (Premises)
A business needs a place where it can do its work. It will need an office, and a factory or shop or storeroom.
All these are called buildings. If the business owns the building, it is a fixed asset. If the business pays rent for the building, the rent is an expense.

Bull (1)
A person who expects share prices in general to move up and who is likely to take a long position in the stock market.

Bull (2)
One who believes the market will rise.

Business Plan
A document that describes an organization’s current status and plans for several years into the future. It generally projects future opportunities for the organization and maps the financial, operations, marketing and organizational strategies that will enable the organization to achieve its goals.

CAPITAL (1)
This has several meanings :
(1) Sole Trader : A person who wants to start a business needs money. He finds money and puts it into the business. This money is called capital.
The business owes this amount of money to the owner. If the business makes a profit it owes the extra money to the owner. If he takes money out of the business it reduces the capital of the business.
(2) Partnership : Where two or more people start a business which is not a limited liability company it is called a partnership. The business credits the money which each person (partner) has paid in to a capital account for each partner. The total of all the partners' capital accounts is the capital of the business.
(3) Limited liability company : Accountants use this term to mean either
(a) the issued share capital; or
(b) the issued share capital plus reserves; or
(c) the issued share capital plus reserves plus debt capital plus any other amounts invested in the business (e.g. deferred tax).
When you have experience you will be able to decide which of these meanings writers are using in different books.

Capital (2)
Factor of production which has itself been produced and
which is not generally entirely consumed in the production process.

Capital (3)
Broadly, all the money and other property of a corporation or other enterprise used in transacting its business.

CALLED-UP CAPITAL
The Registrar of Companies authorises a limited liability company to have a certain amount of capital. This capital is in the form of shares. The company issues the shares to shareholders.
Sometimes the value of the shares is Rs. 10. But the company does not need all the money at once so it asks only for Rs. 5 a share.
Example -
Authorised share capital : Rs.
10000 shares at Rs. 10 each 100000
Issued share capital : 6000
share at Rs. 10 each Rs. 5 paid 30000

In this way, Rs. 30000 is the called-up capital.

CAPITAL ACCOUNT
The account which shows the amount which the business owes to the proprietor (or owner). It consists of : money which the owner has put into the business; plus net profits; less drawings.
In a partnership the partners often prefer to have fixed capital accounts. This means that the business does not adjust the capital accounts for profits and drawings. The capital accounts stay the same year after year. The business enters profits and drawings in each partner's current account.
In this case the amount the business owes the partners is the total of their capital accounts and current accounts.
In the balance sheet of a limited company the amount which the company owes to the owners (the members or shareholders) is called the Share Capital.

Capital Charges
A charge to service revenue accounts to reflect the cost of fixed assets used in service provision.

Capital Expenditure (1)
Expenditure on the acquisition of a fixed asset or expenditure, which adds to and not merely, maintains the value of an existing fixed asset.

CAPITAL EXPENDITURE (2)
Capital expenditure is what a business spends on fixed assets. It is in contrast to revenue expenditure.

Capital Employed
Total long-term funds in the balance sheet (Net operating assets). Can be defined as Total assets less current liabilities

Capital gain/loss
Increase or decrease in the value of wealth of a bondholder due to an appreciation or reduction in the price of her bonds in the bond market.

Capital goods
Goods which are bought not for meeting immediate need of the consumer but for producing other goods.

Capital Market (1)
The Capital Market is that segment of the financial markets in which securities having maturities exceeding one year are traded. Examples include DEBENTURES, PREFERENCE shares and EQUITY SHARES.

Capital Markets (2)
Those financial markets, including institutions and individuals, that exchange securities, especially long-term debt instruments.

Capitalization (1)
Long-term debt, preferred stock and net worth. The loan capital of a community development loan fund; includes that which has been borrowed from and is repayable to third parties as well as that which is earned or owned by the loan fund (i.e. “permanent capital”).

Capitalization (2)
Total amount of the various securities issued by a corporation. Capitalization may include bonds, debentures, preferred and common stock, and surplus.

Capitalist country or economy
A country in which most of the production is carried out by capitalist firms.

Capital Reserves
The reserves created in certain ways, that include the sale of FIXED ASSETS at a profit. These amounts are regarded as not available for distribution as DIVIDENDS.

Capitalist firms
These are firms with the following features (a) private ownership of means of production (b) production for the market (c) sale and purchase of labour at a price which is called the wage rate (d) continuous accumulation of capital.

CARRIAGE
It costs money to move goods from one place to another. Sometimes a customer has to pay this charge.

CARRIAGE OUTWARDS
Sometimes a business has to pay carriage costs on goods which it delivers to customers. This is called carriage outwards.
Carriage outwards is an expense of the business in the profit and loss account. In certain circumstances it is possible to deduct carriage outwards from sales.

CASH ACCOUNT
Sometimes a business posts the monthly totals of receipts and payments of cash to the cash account in the nominal ledger. But usually a business finds the balance of the cash from the cash book.

CASH AT BANK
Money which a business has put into the bank, less any money which the bank has paid out, i.e. the balance.

CASH BOOK
The cash book is one of the four main ledgers of the double-entry system (or ledger system).
The cash book shows :
(a) on the debit side - cash and cheques that come into the business;
(b) on the credit side - cash and cheques that go out of the business.

CASH DISCOUNT
A business wants its customers to pay for goods as soon as possible. A business may offer to receive less money from the customer if the customer pays by a certain date.
For example, On 1 January Mr. J sells goods value Rs. 5000 to Mr. R on credit. If Mr. R pays before 1 February, Mr. J will allow 10 per cent off the full price. Mr. R pays before 1 February, so he pays Rs. 5000 less 10 per cent (500) = Rs. 4500.
The Rs. 500 is called a cash discount. Mr. R does not have to pay by cash. If he pays by cheque before 1 February, he still receives the cash discount.

Cash flow
Reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization, and extraordinary charges to reserves, which are bookkeeping deductions and not paid out in actual dollars and cents.
Cash Flow Financing
Short-term loan providing additional cash to cover cash shortfalls in anticipation of revenue, such as the payment(s) of receivables.

CASH IN HAND
Money (notes and coins) which a business has not put into the bank. The business keeps this money so that it can make payments in cash.

Cash Reserve Ratio (CRR)
The fraction of their deposits which the commercial banks are required to keep with RBI.

CASH SALE (1)
Cash sales are sales which a business makes to customers for cash or cheque, as in shops.

Cash sale (2)
A transaction on the floor of the stock exchange that calls for delivery of the securities the same day. In “regular way” trade, the seller is to deliver on the third business day, except for bonds, which are the next day.

CHARGES
A charge is an amount of money which a person must pay for certain services. A charge is also sometimes called a fee.

CHARTERED ACCOUNTANT
Since the middle of the nineteenth century accountants have formed themselves into associations. These associations are to keep high standards in accounting, to supervise education and training of accountants etc.
Accountants who belong to these institutes and associations are called chartered accountants.
Chartered accountants must train for a number of years in the office of a practising chartered accountant. They must pass a number of exams.

CHEQUE
Banks give books of cheques to their customers. A cheque is a printed form. On the cheque the customer gives written order to the bank to pay money to the person whose name is on the cheque. This person is called the payee. The customer signs the cheque. He is called the payer.
When a person receives a cheque from another person he takes it to the bank. The bank will credit his account with the amount of the cheque.

Chit Fund
This is a non-banking financial intermediary. A chit fund scheme typically involves the collection of periodic subscriptions from enrolled members, which is then disbursed as a loan to a member. The member is selected either by lot or through an auction. The promoter is also called the ‘Foreman’ and the capital given out is called ‘Prize Money’.

Circular flow of income
The concept that the aggregate value of goods and services produced in an economy is going around in a circular way. Either as factor payments, or as expenditures on goods and services, or as the value of aggregate production.

CLOSING BALANCE

The balance of an account at the end of a financial period. The business enters an amount to make both sides of the account balance. It closes the account. That is the closing balance.

CLOSING STOCK
The stock which a business has at the end of a financial period.

COMMISSION (1)
Commission is an amount paid in relation to performance, e.g. selling goods, making profits. Sales commission is an amount which a salesman receives in relation to the amount of goods he sells. Some salesmen receive only commission, others receive salary plus a small commission. Sometimes salesmen or agents receive commission, if they sell more than a certain number of items.
For example, The salesmen in the general store receive commission if they sell more than Rs.10000 worth of goods in a week. The commission is 5 per cent on all sales after the first Rs. 10000. Ram sells goods to the value of Rs. 35000 in one week. He receives commission on Rs. 25000 at 5 per cent = Rs. 1250.

Commission (2)
The broker’s basic fee for purchasing or selling securities or property as an agent.

Commission broker
An agent who executes the public’s orders for the purchase or sale of securities or commodities.
Community Assets
Assets that the local authority intends to hold in perpetuity, that have no determinable useful lives, and that may have restrictions on their disposal. Examples of community assets are parks and historic buildings.

COMPANY
A business which several people, who are shareholders, own is called a company.
An accountant

regard the business of a sole trader or a partnership as a separate entity from the owner. But the owner or partners make the contracts (or agreements). If the owner or a partner dies the business finishes. Also, by law, most partnerships cannot have more than twenty members.
A company is different. It is a legal person, seperate from the people who own and run it. This means that the company will still exist if one of the owners or directors dies, or wants to stop being a director. A company can also have a large number of members. It is therefore much easier to have a large business which is a company rather than a partnership. Most companies are limited companies.

COMPANY SECRETARY
Every company must have a company secretary. His job is to ensure that the company keeps all the records and documents which the law requires.
The company secretary is an important company official.
He is responsible for completing the annual return of his company. He keeps minutes of all annual general meetings and directors' meetings. He sends out the notices and annual reports etc.

Constant returns to scale
Constant returns to scale is a property of production function that holds when a proportional increase in all inputs results in an increase in output by the same proportion.

Consumer durables (1)
Consumption goods which do not get exhausted immediately but last over a period of time are consumer durables.

Consumer durables (2)
Consumption goods which do not get exhausted immediately but last over a period of time are consumer durables.

Consumer Price Index (CPI) (1)
Percentage change in the weighted average price level. We take the prices of a given basket of consumption goods.

Consumer Price Index (CPI) (2)
Percentage change in the weighted average price level. We take the prices of a given basket of consumption goods.

Consumption goods
Goods which are consumed by the ultimate consumers or meet the immediate need of the consumer are called consumption goods. It may include services as well.

CONTINGENCY OR CONTINGENT LIABILITY
When a business prepares a balance sheet it must include all its liabilities.
Sometimes a business is not sure whether it will have a liability for a particular item. This is because the liability will only arise some time in the future if something happens.
For example, At the end of the financial year a customer may be suing the company in the law courts for damages for a loss.
At the date of the balance sheet the company does not know
what its liability will be. It may be nothing, or it may be a large sum of money.
This is a contingent liability. It depends on the contingency- on something that will happen in the future (here it means the result of a court case).

CONTRACT
An agreement between two or more people which will be enforced by law. If one person does not do what he has agreed to do the other person or people can take him to court.

Convertible
A bond, debenture or preferred share that may be exchanged by the owner for common stock or another security, usually of the same company, in accordance with the terms of the issue.

COST ACCOUNTING
Accountants deal mainly with the financial affairs of a business - the asset and liability items in the balance sheet, the revenue and expense items in the profit and loss account.
But in manufacturing business the management want to know how much it costs to make a product or part of a product.
For example, A company makes cars. The management would want to know how much it costs to make the body of the car; and the engine; and to paint the car etc.
This is called costing or cost accounting. It gives information to management which they cannot get from ordinary financial accounting.

Corporate tax
Taxes imposed on the income made by the corporations (or private sector firms).

Cost function
For every level of output, it shows the minimum cost for the firm.

Cost of Capital
The weighted average cost for long-term funds raised by a company from different sources such as term loans, DEBENTURES/BONDS, PREFERENCE SHARES, EQUITY SHARES and retained earnings.

Cost of Goods Sold
Alternatively called the Cost of Sales, it is the sum of total input costs associated with a certain quantity of goods sold. The total input costs include materials used, direct and indirect labour, utilities, and other manufacturing expenses including DEPRECIATION.

COST PRICE
The amount that a person pays for a thing when he buys it.

Contingent Liabilities
The liabilities that may arise as a result of some future event which, though possible, is deemed unlikely; for example, a court judgement on a pending lawsuit may impose a financial payment on a company.

Corporate Governance
The manner in which a company is managed. The term, Corporate Governance connotes the importance of responsibility and accountability of a company’s management to its shareholders and other stakeholders, viz., employees, suppliers, customers and the local community. Hence it calls for ethics, morals and good practices in running a company. Good corporate governance would be reflected in generally good performance, clean business practices, improved disclosure and sound policies relating to capital expenditure, financing and dividend payment, which will enhance shareholders’ wealth.

CREDIT (1)
To buy goods on credit is to get possession of the goods and to pay for them sometime after you have bought them. To sell goods on credit means that the business delivers goods to a customer and the customer pays for the goods at a later date.
In the double-entry system, credits are :
Increases in : share capital and reserves, profit and loss account (retained profits), liabilities, revenues;
Decreases in : assets, expenses, taxes and dividends.
You credit the account which 'gives' and you debit the account which 'receives'.
Credit (2)
Borrowing to buy something with the promise to make payment at a later time
CREDIT BALANCE
The balance of an account when the credit side is greater than the debit side.
NOTE : You must enter the balance to close the account on the debit side, and then carry it down to the credit side.
For example,
X Account
Debit side Rs. Credit side Rs.
To Cash 100 By Goods 300 To Cash 50 By Goods 450 To Balance c/d 600 ___ ___
750 750
=== ===
By Balance b/d 600

Credit card
A small, specially coded plastic card issued by a bank, business, etc., authorizing the cardholder to purchase goods and services on credit.
Credit cards allow users to borrow funds (that must be repaid) that the user does not currently have.
Credit Note
Document showing details of a refund due to a customer. Must show the equivalent details of an invoice

CREDIT PURCHASES
Credit purchases are goods which a business buys from a supplier on credit.

CREDIT SALES
Credit sales are sales which a business makes to customers on credit.

CREDITOR (1)
A creditor is a person or business who has supplied goods to a business. The creditor has not yet received money from the business for the goods.

Creditor (2)

Someone to whom money is owed.

CURRENT ACCOUNT
1- Sometimes in a partnership the partners want to keep their capital
accounts at a fixed amount.
Therefore they open a current account for each partner. They credit partner's salaries, interest on capital and share of profits to these accounts. They debit drawings and interest on drawings.
2- Current account has another meaning. It is the name for the usual
account which a business has with a bank. This is to show the difference between this account and any other account which the business keeps at the bank.

Current assets (1)
Those assets of a company that are reasonably expected to be realized in cash, sold or consumed during one year. These include cash, U.S. Government bonds, receivables and money due usually within one year, as well as inventories.

Current Assets (2)
Assets (stock, debtors) expected to be turned into cash within one year of the balance sheet date

Current Assets (3)
The assets which are expected to be converted into cash or consumed during the ‘Operating Cycle’ of a business. The operating cycle is the time taken for the sequence of events from the purchase of raw materials to the collection of cash from customers for goods sold. Hence, it is also known as the ‘Cash Conversion Cycle’. However, if raw materials are bought on credit, then the cash conversion cycle is shorter than the operating cycle by the period of credit available. Examples of current assets are cash, short-term investments particularly MONEY MARKET securities, raw materials, work-in-process, finished goods, and ACCOUNTS RECEIVABLE.

Current Asset (4)
Assets that will normally be turned into cash within a year.

Currency deposit ratio
The ratio of money held by the public in currency to that held as deposits in commercial banks.

CURRENT LIABILITIES (1)
Current liabilities are debts which a business must pay in the near future - not later than 12 months from the date of the last balance sheet.
Current liabilities include : 1- Trade creditors (amounts which the business owes to suppliers for goods and services), 2- Other creditors, 3- Accrued expenses, 4- Taxs, 5- Proposed dividend, 6- Bank overdraft, 7- Short-term loans, etc.

Current Liabilities (2)
The claims against a company that will become due within a year. These are mainly LIABILITIES on account of purchase of materials or services rendered to the firm. Examples include accounts and PROMISSORY NOTES payable, as well as taxes and loan repayments falling due within the year. Current Ratio This ratio is a measure of a company’s ability to pay its short-term debts as they become due. It is computed from a BALANCE SHEET by dividing CURRENT ASSETS by CURRENT LIABILITIES. In India, the general norms for this liquidity ratio is 1.33

Current liabilities (3)
Money owed and payable by a company, usually within one year.

Current Liability (4)
Liability that will normally be repaid within a year.

Current Liabilities (5)
Liabilities (trade creditors, accruals, overdrafts,short term loans) expected to be paid within one year of the balance sheet date.

CURRENT RATIO (1)
A financial ratio which compares the total current assets of the business with the total current liabilities. It is used as an indicator of the ability of the business to meet its debts as they become due.
The ratio is quoted as a number.
Current Assets
The formula is : _____________
Current Liabilities

For example, If the ratio is 200 ÷ 100 = 2 times, this means that the business has twice as many assets as current liabilities. Therefore it should have no difficulty in paying its current liabilities.

Current Ratio (2)
Current assets divided by current liabilities — a measure of liquidity. Generally, the higher the ratio, the greater the “cushion” between current obligations and a firm’s ability to meet them.
Current Ratio (3)
Current assets divided by current liabilities

Dealer
An individual or firm in the securities business who buys and sells stocks and bonds as a principal rather than as an agent. The dealer’s profit or loss is the difference between the price paid and the price received for the same security. The dealer’s confirmation must disclose to the customer that the principal has been acted upon. The same individual or firm may function, at different times, either as a broker or dealer.

DEBENTURE (1)
A deed (or document) which states the terms of a loan to a company.
It states all the terms of the loan which will include such items as:
(a) the interest which the company must pay and the date;
(b) the date for repayment of capital;
(c) the assets which the company has given as security for the loan;
(d) what will happen if the company does not pay the interest.
Debentures are part of the debt capital of the company. If the business uses one of its buildings as a security, they may be called secured debentures, or mortgage debentures.

Debenture (2)
A debt security issued by companies, having a certain MATURITY and bearing a stated COUPON RATE. Debentures may be unsecured or secured by ASSETS such as land and building of the issuing company. Debenture holders have a prior claim on the earnings (coupon) and ASSETS in the event of liquidation, as compared to PREFERENCE and equity shareholders.

Debenture (3)
A promissory note backed by the general credit of a company and usually not
secured by a mortgage or lien on any specific property.

DEBENTURE INTEREST
When a company obtains a debenture (or loan) it must pay interest on the debenture. This is called debenture interest.
The interest is a fixed percentage of the loan. It is usually payble twice a year. It is an expense of the business in the profit and loss account.

Debenture Redemption Reserve (DRR)
The term is given to the reserves that are to be compulsorily created by companies for the express purpose of retiring DEBENTURES issued by them whose MATURITY exceeds 18 months. Before redemption commences, the reserves (DRR) must cumulate to 50 percent of the amount of debentures issued.
DEBIT
To debit an account is to enter a transaction on the debit side.
Debits are :
Increase in :
assets;
expenses;
taxes and dividends.
Decreases in :
share capital and reserves;
retained profits;
liabilities;
revenues.
Sometimes it is said that you debit the account which 'receives' and credit the account which 'gives'.

DEBIT BALANCE (1)
The balance of an account when the debit side is greater than the credit side.
NOTE: You must enter the balance to close the account on the
credit side; and then bring it down on the debit side. E.g. :
X Account
______________________________________________________________
Debit side Rs. Credit side Rs.
__________________________________________________________ 600 48
420 619
Balance c/d 353
_____ _____
1020 1020
_____ _____ Balance b/d 353

Debit balance (2)
In a customer’s margin account, that portion of the purchase price of stock, bonds or commodities that is covered by credit extended by the broker to the margin customer.

Debit card
A small, specially coded plastic card issued by a bank; allows the cardholder to transfer funds electronically and immediately from his or her checking account, as if the cardholder were writing a check to pay for a purchase. A debit card is different from a credit card in that debit card users are limited to accessing only the available balances in their deposit accounts. Credit cards allow users to borrow funds that must be repaid.

DEBIT SIDE
This is always the left-hand side of an account in the double-entry system. E.g. :
Cash Book
Debit Rs. Credit Rs.
Side Side

Debt
An amount owed for funds borrowed. The debt may be owed to an organization’s own reserves, individuals, banks, or other institutions. Generally, the debt is secured by a note, bond, mortgage, or other instrument that states repayment and interest provisions. The note, in turn, may be secured by a lien against property or other assets.

Debt-Equity Ratio
This ratio is used to analyze FINANCIAL LEVERAGE. It is a structural ratio that gauges the level of debt financing, and is worked out by dividing total debt, short-term and long-term, by NET WORTH. The denominator would comprise total equity of common stockholders and PREFERENCE capital.
Debt Service
Amount of payment due regularly to meet a debt agreement; usually a monthly, quarterly or annual obligation.

Debt Service Reserve
Term used to refer to cash reserves set aside by a borrower, either by internal policy or lender covenant, to repay debt in the event that cash generated by operations is insufficient.

DEBTORS
Debtors are people who owe money to a business for goods or services which the business has supplied to them on credit.

Decreasing returns to scale (1)
Decreasing returns to scale is a property of production function that holds when a proportional increase in all inputs results in an increase in output by less than the proportion.

Decreasing returns to scale (2)
Decreasing returns to scale is a property of production function that holds when a proportional increase in all inputs results in an increase in output by less than the proportion.

Default
A failure to discharge a duty. The term is most often used to describe the occurrence of an event that cuts short the rights or remedies of one of the parties to an agreement or legal dispute, for example, the failure of the mortgagor to pay a mortgage installment, or to comply with mortgage covenants.

Deflation
A phenomenon of falling prices in an economy, which may be due to a contraction in MONEY SUPPLY.

Deficit
In general, it connotes a shortfall. In the context of a BUDGET, it refers to the excess of expenditure over revenues during a certain period.

DEFICIENCY
A deficiency means that there is not enough of something. There is a shortage.
There may be a deficiency in the cash of a business.
For example, The cash book shows that there is a cash balance of Rs.95, but there is only Rs. 80 in the cash box. Therefore, there is a deficiency of Rs. 15.

Deficit financing through central bank borrowing
Financing of budget deficit by the government through borrowing money from the central bank. Leads to increase in money supply in an economy and may result in inflation.

Demand curve
Demand curve is a graphical representation of the demand function. It gives the quantity demanded by the consumer at each price.

Demand function
A consumer’s demand function for a good gives the amount of the good that the consumer chooses at different levels of its price when the other things remain unchanged.

DEPRECIATION (1)
Fixed assets have a useful life which lasts for a number of years.
For example,
Motor vans and lorries - about 3-5 years
Plant and machinery - about 7-12 years
Furniture and equipment - about 10-20 years
Buildings - about 20-50 years
The business must therefore charge to the profit and loss account the cost of the asset which it has used. It does not know the exact amount until the end of the life of the asset. But the business makes an estimate and charges an amount as an expense to the profit and loss account each year. This is for the estimated amount of the asset that the business has used up in the year.
For example, A machine cost Rs. 1000. The business estimates that the machine will last 10 years. There are a number of ways to calculate depreciation. One way would be :

Cost 1000
= ___________ = _____
Estimated life 10

= Rs. 100 depreciation per year

Depreciation (2)
A decrease in the price of the domestic currency in terms of the foreign currency under floating exchange rates. It corresponds to an increase in the exchange rate.

Depreciation (3)
Wear and tear or depletion which capital stock undergoes over a
period of time.
Depreciation (4)
An accounting process by which the cost of a FIXED ASSET, such as a building or machinery, is allocated as a periodic expense, spread over the depreciable life of the ASSET. The term also means the amount of expense determined by such a process. Sometimes, it is called AMORTIZATION when the ASSET is intangible or ‘depletion’ when the asset is a natural resource, such as minerals. There are different methods of depreciation such as the Straight Line Method and the Written Down Value (WDV) method.

Depreciation (5)
Normally, charges against earnings to write off the cost, less salvage value, of an asset over its estimated useful life. It is a bookkeeping entry and does not represent any cash outlay nor are any funds earmarked for the purpose.
Depreciation (6)
A charge (expense) in the profit and loss account against the book value of a tangible fixed asset. It represents the “wearing out” of an asset during an accounting period
Depreciation (7)
The measure of the wearing out, consumption, or other reduction in the useful economic life of a fixed asset, whether arising from use, effluxion of time or obsolescence through technological or other change.

Depression
An economic condition that is characterized by a severe contraction in economic activity, which is manifested. In numerous business shut-downs, widespread unemployment, and declining investment in plant and equipment on account of falling sales.

DEPRECIATION ACCOUNT
The expense account which a business debits with an amount of depreciation that it calculates each year by an agreed method.
The business transfers the balance at the end of each year to the profit and loss account.

Devaluation (1)
The decrease in the price of domestic currency under pegged exchange
rates through official action.

Devaluation (2)
The lowering of a country’s official exchange rate in relation to a foreign currency (or to gold), so that exports compete more favorably in the overseas markets. Devaluation is the opposite of REVALUATION.

DIRECT EXPENSE
In a manufacturing account and in cost accounts there are direct expenses and indirect expenses.
A direct expense is an expense which belongs directly to a particular product which the factory is making at the time.
For example, Royalties are a direct expense. The business is manufacturing a special product which has a patent on it. Therefore the business must pay royalties to the inventor of the product.
Expenses like electricity are indirect expenses. The business uses electricity to make other products at the same time. Therefore electricity is an indirect manufacturing expense.
The offices and sales rooms also use electricity. Therefore electricity is also an administrative expense and selling and distribution expense.
Examples of direct expenses are :
(a) the hire of special plant for a particular job;
(b) royalties which a business must pay to an inventor for the use of a patent.

DIRECT LABOUR
Direct labour is an item in the manufacturing account or cost accounts. It means the wages of factory workers who are making products or parts of a product for the factory to sell. Not all factory wages are direct labour.
For example, The work of a machine operator who makes a product on his machine will be direct labour.
But a foreman supervises many different jobs, or products. His wages are an indirect expense, in the factory overheads part of the manufacturing account.

DIRECT MATERIALS
Direct materials are an item in the manufacturing account or cost accounts. They are materials which a factory uses to make a particular product which the business will sell.
For example, A factory makes car tyres. It needs rubber to make the tyres. Therefore, rubber is a direct material.

DIRECT WAGES
See : direct labour
Director
Person elected by shareholders to serve on the board of directors. The directors appoint the president, vice presidents, and all other operating officers. Directors decide, among other matters, if and when dividends shall be paid.
Discount (1)
This refers to : 1. The margin by which a security’s market price is lower than its face value. 2. In security analysis, it means the adjustment in security prices consequent to the assimilation of new information about a company, or news in general. An illustration is the increase in the price of a stock following the news of the company bagging big sale orders. 3. Reduction in the sale price of goods.

Discount (2)
The amount by which a preferred stock or bond may sell below its par value.
Also used as a verb to mean “takes into account” as the price of the stock has discounted the
expected dividend cut.

DISCOUNT ALLOWED
A business may allow its credit customers to pay less if they pay before a certain date. The business keeps a record of the amounts of discount allowed.

DISCOUNT RECEIVED
A business may receive a cash discount from its suppliers if it pays for its credit supplies before a certain date. This means that the business pays less for its goods. The business keeps a record of the amounts of discount received.

Disinvestments
The sale of shareholding by an individual or institution in order to raise cash.
DISSOLUTION
Sometimes the partners in a business decide to end the partnership. This may be because a partner dies or retires. Or they may ask another person to join the business as a new partner. Any of these is called a
dissolution.
First the old partners must pay all their debts. Then they sell the assets and receive the money from this.
But usually when the new partners want to continue the business, they do not sell the assets. They make entries in the accounts to finish the old partnership and open new accounts for the new partnership.

DISSOLUTION ACCOUNT
The account which a business uses for all the transactions to do with dissolution of partnership.

DISSOLUTION OF PARTNERSHIP
When a partner dies or retires or a new partner joins the partnership, the

old partnership comes to an end. This is called a dissolution of partnership.
If the business continues without the partner who has left, or with the new partner who has joined the business, this is a new partnership.

DISTRIBUTION AND SALES EXPENSES
In the manufacturing, trading and profit and loss account, distribution and sales expenses are a part of the profit and loss account. Distribution and sales expenses include all items of expense to do with the distribution of finished goods from the factory to the selling place; and all expenses to do with selling the goods.
For example, Salesmen's salaries, salesmen's commission, carriage outwards, advertising and expenses, depreciation of delivery vans, bad debts and provision for bad debts.

Diversification
Spreading investments among different types of securities and various
companies in different fields.

DIVIDEND (1)
The amount which a limited company pays to its shareholders as their share of the profits each year.
The amount which they receive is a certain percentage of the issued share capital of the company. The company can only pay the dividend out of the profits.
Sometimes if the directors know that the profits will be good enough they authorise payment of dividend during the financial year. This is called an interim dividend.
When the directors know the profit for the year they propose a final dividend. The shareholders must approve the amount of dividend at the annual general meeting of the company.

Dividend (2)
The payment made by a company to its shareholders. Legal and financial considerations have a bearing on the level of dividend to be paid. For instance, dividends may be paid out of profits alone; so also, a growing company needs funds to finance its expansion and hence may pay only a modest dividend, in order to conserve resources.

Dividends (3)
Payment made to shareholders out of retained profit

Dividend (4)
A payment of apportion of a company’s net profits which is periodically made to stockholders

DONATION
A donation is money which a person gives to another person as a gift.
People often give donations to charities : For example, to help old people, poor children and underdeveloped countries.

Double coincidence of wants
A situation where two economic agents have complementary demand for each others’ surplus production.

DOUBLE-ENTRY SYSTEM
The basic accounting system which accountants have used for hundreds of years. The basic principle is that a business must enter every transaction twice in its books, because there are two sides to each transaction. One entry will be on the debit side and the other will be the credit side.

DOUBTFUL DEBT
Most business sell goods to their customers on credit. Sometimes some of these customers do not pay their accounts by the correct date.
After some time the business thinks that it is possible these customers will not pay their debts. These debts are called doubtful debts. When the business prepares its final accounts it should make a provision for doubtful debts. This is similar to a provision for bad debts.

DRAWINGS
Drawings are money or goods that the owner or partner of a business takes out of the business for his own personal use. The drawings account is a part of the nominal ledger and the business debits money which the owner take out to the drawings account.
In the balance sheet the accountant sometimes subtracts drawings from the owner's capital and net profit.
For example,
Capital : Rs.
Capital at beginning of year 2000 Add : net profit for the year 800
_____ 2800
Less : drawings 700
_____
2100
_____
Sometimes he debits drawings to the partners' current accounts at the end of the year. Sometimes a partner takes goods out of the business for his own personal use. The accountant treats these goods in the same way as drawings in money and debits them to the partner's drawings account.

DUE DATE
The date on which a person or business must pay what it owes to another person or business.
Dumping
The sale of goods in a foreign market at a price that is below the price realized in the home country, after allowing for all costs of transfer including transportation charges and duties. The motive may be to enhance revenues, offload surplus stocks or a predatory intent of killing foreign competition.

Duopoly
Duopoly is a market with just two firms.

Earnings Per Share (EPS)
(EPS) The net profits of a company expressed on a per (EQUITY) SHARE basis. It is arrived at by dividing the figure of profits after taxes and DIVIDENDS paid on PREFERENCE SHARES, if any, by the number of equity shares outstanding. Therefore, it does not reveal the potential impact of dilution in earnings on account of securities such as convertibles or warrants that may be outstanding. Moreover, an improvement in EPS does not necessarily indicate a more productive use of the total amount of funds available with a firm.

EBIT
Earnings before interest and tax; i.e. operating profit

EBITDA
Earnings before interest, tax, depreciation and amortisation

Economic agents or units
Economic units or economic agents are those individuals or institutions which take economic decisions.

Effective demand principle
If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, aggregate output is determined solely by the value of aggregate demand. This is called effective demand principle.

Entrepreneurship
The task of organising, coordinating and risk-taking during production.

EOQ
The acronym for Economic Order Quantity, a term that relates to INVENTORY management. It is the optimum size of order which minimizes the cost of purchasing and holding inventories.

Equilibrium
Equilibrium is a situation where the plans of all consumers and firms in the market match.

Equity (1)
The ownership interest of common and preferred stockholders in a company. Also refers to excess of value of securities over the debit balance in a margin account.

EQUITY (2)
Usually equity means the same as equity capital.

Equity (3)
The value of property in an organization greater than total debt held on it. Equity investments typically take the form of an owner’s share in the business, and often, a share in the return, or profits. Equity investments carry greater risk than debt, but the potential for greater return should balance the risk.

EQUITY CAPITAL
Equity shareholders are the holders of ordinary shares of a company. They are the owners of the company, so they take all the risks of losses and receive all the profits. Equity capital is the amount which the equity shareholders have invested in the company. It consists of :
(a) amounts they have paid to the company for shares; these are shown
as share capital and share premium ; and
(b) reserves and retained profits which the company has earned for
the equity shareholders.
The accountant adds reserves and retained profits to the ordinary share capital because they represent additional investments by the equity owners (shareholders) in the company. For example, :
Rs.
Ordinary share capital 100000
Share premium 10000
Reserves - capital and revenue 50000
Retained profits (profit and loss a/c balance) 30000 ______
Equity capital = 190000
______
Sometimes this is called the total shareholders' interests, or total shareholders' funds.

Equity Participation
An ownership position in an organization or venture taken through an investment. Returns on the investment are dependent on the profitability of the organization or venture.

ERROR
An error in accounting is a mistake in the books of a business.

Ex ante consumption
The value of planned consumption.

Ex ante investment
The value of planned investment.

Ex ante
The planned value of a variable as opposed to its actual value.

Excess demand
If at a price market, demand exceeds market supply, it is said that excess demand exists in the market at that price.

Excess supply
If at a price market, supply is greater than market demand, it is said that there is excess supply in the market at that price.

Ex-dividend
A synonym for “without dividend.” The buyer of a stock selling ex-dividend
does not receive the recently declared dividend. When stocks go ex-dividend, the stock tables include the symbol “x” following the name.

EXPENDITURE
Usually another name for expenses. Sometimes accountants have a more precise meaning for expenditure. They mean the amount of money spent on an item at any one time or in a financial year. This is not the same as an expense.
For example, They talk about capital expenditure and revenue expenditure.
1- All money spent on fixed assets, i.e. buying a building or a motor
car, is capital expenditure.
2- All money spent on items for use or for resale, i.e. stationery,
telephone or materials, is revenue expenditure.
3- Capital expenditure becomes an expense when the accountant
charges it to the profit and loss account as depreciation etc. over a
number of years.
4- Revenue expenditure becomes an expense when the accountant
matches it against the revenue which the business has earned
during the financial year.

Ex-rights
Without the rights. Corporations raising additional money may do so by offering their stockholders the right to subscribe to new or additional stock, usually at a discount from the prevailing market price. The buyer of a stock selling ex-rights is not entitled to the rights.

Expenditure method of calculating national income
Method of calculating the national income by measuring the aggregate value of final expenditure for the goods and services produced in an economy over a period of time.

Exports
Sale of goods and services by the domestic country to the rest of the world.
Ex-post
The actual or realised value of a variable as opposed to its planned value.
Externalities
Those benefits or harms accruing to another person, firm or any other entity which occur because some person, firm or any other entity may be involved in an economic activity. If someone is causing benefits or good externality to another, the latter does not pay the former. If someone is inflicting harm or bad externality to another, the former does not compensate the latter.

External sector
It refers to the economic transaction of the domestic country with the rest of the world.

FACE VALUE
The amount which a coin, banknote or share certificate shows on its face. Therefore face value means what something appears to be worth on the face of it.

FACTORY
In a manufacturing business the factory is the building where the business makes its products.
If the business owns the factory building it is a fixed asset on the balance sheet. If the business pays rent for the factory building, the rent is an expense in the profit and loss account.
If the business pays rent for the factory building, then it does not own the building, therefore it is not an asset of the business and the business will not enter the cost of the building in the balance sheet.

FACTORY COST
Factory cost is the cost of goods which the factory has made into complete products. It does not include the cost of goods which the factory has partly made or partly finished. Usually factory cost means the cost of goods before the business adds trading, administration, selling and distribution expenses.
Fair Value
The fair value of a fixed asset is the price at which an asset could be exchanged in an arms length transaction less, where applicable, any grants receivable towards the purchase or use of the asset.

Fiat money
Money with no intrinsic value.

FICTITIOUS ASSET
Fictitious assets include such items as preliminary expenses and debenture discount. The company has made these expenses but has decided not to charge these items to the profit and loss account until a later date. They are a kind of deferred expense. No asset exists. At some time in the future the company will enter the items in the accounts as an
expense. A fictitious asset has no value.

FINAL ACCOUNTS
The term final accounts usually means the trading and profit and loss account (or manufacturing, trading and profit and loss account) : plus the balance sheet.
The balance sheet is not an account. But final accounts include the balance sheet and the other accounts that a business prepares at the end of a financial period.

Final goods
Those goods which do not undergo any further transformation in the
production process.

FINANCE COMPANY
Finance companies lend money to people. Finance companies charge interest on loans which they make to customers.
Some finance companies only lend money to people who wish to buy a house. These companies are called building societies.
Other finance companies lend money to people to buy cars. The person pays the loan and interest in monthly instalments.
For example, Ram wants to buy a car for Rs. 20000 but has no money. He goes to a finance company. They agree to buy the car for him. They ask Ram to pay Rs. 2000 each month for 2 years to them (a total of Rs. 24000 over the 2 years).

Financial Leverage
The ability to magnify earnings available to equity shareholders, by the use of debt or fixed-charge securities. Generally, the higher the amount of debt in relation to total financing, the greater will be the impact on profits available to equity shareholders, other things being equal.

FINANCIAL YEAR
In many business the accounting period is one year. This is the financial year of the business. But the financial year may finish on any day of the year that the business choose, usually a date when the stocks of the business are at their lowest.

FIRM (1)
Firm is another name for a business. It usually applies only to partnerships. Company is another name for a business which is a limited liability company.
Firms (2)
Economic units which carry out production of goods and services and employ factors of production.

Firm’s supply curve
Firm’s supply curve shows the levels of output that a profit maximising firm will choose to produce at different values of the market price.

Fiscal policy
The policy of the government regarding the level of government
spending and transfers and the tax structure.

FIXED ASSETS (1)
Fixed assets are items which cost a fair amount of money and have a long life. A business needs these assets in order to carry on its business. They are part of the resources of the business, which the business uses to make profits.
A business does NOT intend to sell its fixed assets in the normal course of business. Stock is NOT a fixed asset. A business does NOT normally intend to convert a fixed asset into cash. Debtors are NOT a fixed asset.
Examples of fixed assets are : land,buildings, plant and machinery, furniture, fixtures and fittings, motor vehicles.
Fixed Assets (2)
Assets (For example, buildings, computers) used on a long-term continuing basis to operate a business (i.e. not bought to be sold to customers)

Fixed charges
A company’s fixed expenses, such as bond interest, which it has agreed to pay whether or not earned, and which are deducted from income before earnings on equity capital are computed.

Fixed exchange rate
An exchange rate between the currencies of two or more countries that is fixed at some level and adjusted only infrequently.

Fixed Cost
A cost that remains the same, regardless of whether output increases or decreases; e.g. rent is fixed – it does not vary with the level of sales

Fixed expenses
Expenses that are the same every month.

Fixed input
An input which cannot be varied in the short run is called a fixed input.

Flexible/floating exchange rate
An exchange rate determined by the forces of demand and supply in the foreign exchange market without central bank intervention.

Floor
The huge trading area - about the size of a football field - where stocks, bonds and options are bought and sold on the New York Stock Exchange.

Flows
Variables which are defined over a period of time.

Foreign exchange
Foreign currency, all currencies other than the domestic currency of a given country.
Foreign exchange reserves
Foreign assets held by the central bank of the country.

Forfeiture
It means the deprivation of shares held by an investor, usually as a consequence of default in paying money, called upon allotment, to the company. As a result of a forfeiture, the investor ceases to be a shareholder insofar as the forfeited shares are concerned; however, he remains liable for the sum due.

Four factors of production
Land, Labour, Capital and Entrepreneurship. Together these help in the production of goods and services.

FREEHOLD PREMISES
If the person who occupies buildings has total ownership of the buildings the buildings are called freehold premises.
Leasehold premises are another type of premises. In this case the owner of the premises (the lessor) agrees to allow another person (the lessee) to use the building for a certain time, For example, 10, 20, 50 years. The lessee pays rent to the lessor (or owner). At the end of the period of the lease, the premises become the property of the lessor, whoever built the premises.
Fund Balance
Net worth in a nonprofit organization; total assets minus total liabilities.

FURNITURE
Furniture is a general name for items like tables, chairs, desks and cupboards which a business needs for its offices etc. Furniture is usually a fixed asset.

GARNER v/s MURRAY RULE
Sometimes two or more persons or businesses are not able to agree about what action they should take in some matter or what money they should receive. One of the people or businesses may take the case to the law courts. This person or business is called the plaintiff. The other is called the defendant. The court uses their names to identify the case, For example, Garner v/s Murray.
Sometimes these cases settle important matters of principle. Courts use these cases for many years to study other cases where the facts are similar.
Courts use the case of Garner v/s Murray to decide what action they should take when a partner's account shows a debit when partners wish to end a partnership.

General Ledger (G/L)
A book or computer programme which holds details of each of the general ledger accounts. Also known as Nominal Ledger

GENERAL RESERVE
Sometimes a limited company does NOT wish to distribute all its profits for some reason. Perhaps it needs the money to expand the business or it has not enough cash to pay out large dividends.
Therefore it transfers some of its profits to a general reserve. This indicates to shareholders that the money will not be available in normal circumstances in the future for distribution as a dividend.

Goodwill (1)
The value of intangible facets of a business such as its name, reputation and location, which is reflected in the excess of its acquisition price over the fair value of its tangible assets.

GOODWILL (2)
A business that has worked well for many years will have many customers who are pleased with the goods it sells or the service it gives. These customers will come to this business rather than go to another.
This is called goodwill. Accountants put a value on goodwill when a proprietor sells a business or when there is a change in a
partnership. This is because the business makes a bigger profit due to the goodwill it has built up with the customers. Goodwill is an intangible asset.
GROSS PROFIT
The trading profit which a business has made before it deducts the expenses of the business, For example, :
Rs. Rs.
Opening Stock 30000 Sales 90000
Purchases 40000 Closing Stock 10000
Manufacturing
Expenses 5000
Gross Profit 25000
______ ______
100000 100000 ______ ______ Gross profit is a very important figure. It can tell a good manager or owner how successful he has been, and whether he has made enough money to pay his expenses.

GDP Deflator
Ratio of nominal to real GDP.

Government bonds
Obligations of the U.S. Government, regarded as the highest grade
securities issues.

Government expenditure multiplier
The numerical coefficient showing the size of the increase in output resulting from each unit increase in government spending.

Government
The state, which maintains law and order in the country, imposes taxes and fines, makes laws and promotes the economic wellbeing of the citizens.

Grace period
The amount of time one has to pay a line of credit before there is a finance charge

Great Depression
The time period of 1930s (started with the stock market crash in New York in 1929) which saw the output in the developed countries fall and unemployment rise by huge amounts.

Gross Domestic Product (GDP)
Aggregate value of goods and services produced
within the domestic territory of a country. It includes the replacement investment
of the depreciation of capital stock.

Gross fiscal deficit
The excess of total government expenditure over revenue receipts and capital receipts that do not create debt.

Gross investment
Addition to capital stock which also includes replacement for the wear and tear which the capital stock undergoes.

Gross National Product (GNP)
GDP + Net Factor Income from Abroad. In other words GNP includes the aggregate income made by all citizens of the country, whereas GDP includes incomes by foreigners within the domestic economy and excludes incomes earned by the citizens in a foreign economy.

Gross primary deficit
The fiscal deficit minus interest payments.

Havala Transaction
An Indian term which refers to a mode of transfering of funds out of India or into the country, bypassing official and legal channels. As an example, an individual may transfer his ill-gotten cash to a discreet bank in a foreign country. Using the havala route, he gives the rupees to an intermediary in India, who then arranges a reciprocal deposit of an equivalent amount to his account in the chosen bank. At a later date, the funds could be brought into India through another havala transaction. Since such deals circumvent official channels, there is a loss to the nation in terms of the net inflow of foreign exchange.

High powered money
Money injected by the monetary authority in the economy. Consists mainly of currency.

HIRE PURCHASE (1)
Hire purchase is a special kind of credit purchase. People often buy expensive household items such as televisions and washing
machines on hire purchase. A person who wishes to buy such an item makes a credit agreement with a hire purchase company. The company lends him the money to pay to shop for the goods.
He agrees to pay a certain amount of money each week or each month to the hire purchase company for the goods. He may take the goods home and use them. But the company owns the goods until he has paid for them.
He also pays an amount of interest on the loan from the hire purchase company.

Hire-Purchase Arrangement (2)
A transaction by which an ASSET is acquired on payment of regular installments comprising the PRINCIPAL and interest spread over a specified period. Although the asset gets transferred on payment of the last installment, the hirer can avail of DEPRECIATION and deduction of interest cost for computing taxable income.

Holding company
A corporation that owns the securities of another, in most cases with voting control.

Households
The families or individuals who supply factors of production to the firms and which buy the goods and services from the firms.

Hundi
An Indian term for a negotiable instrument that is similar to a BILL OF EXCHANGE.

ICICI
An acronym for Industrial Credit and Investment Corporation of India Limited, which is a private sector term lending institution set up in 1955. Its sponsors include foreign institutions, notably the World Bank. Besides granting term loans, particularly foreign currency loans, it assists businesses by DISCOUNTING bills, providing LEASE finance, managing PUBLIC ISSUES and providing VENTURE CAPITAL.

IDBI
An acronym for the Industrial Development Bank of India, which is the apex term lending institution in the field of industrial finance. From 1976, IDBI has been functioning as a separate entity, wholly owned by the Government of India.
IFCI
The oldest of the term lending institutions, Industrial Finance Corporation of India was set up by the Government of India in 1948 to provide medium and long-term finance to businesses in the private sector.

Imports
Purchase of goods and services by the domestic country to the rest of the world.

Income
Earnings that result from providing resources in the market place.

INCOME AND EXPENDITURE ACCOUNT
Non-business organisations such as sports and recreational clubs and charitable institutions do NOT have a trading and profit and loss account.
This is because their main function is not to trade. These clubs usually prepares an income and expenditure account. The name of the account describes what it is. The club credits all its income and debits all its
expenditure.
The balance is either : surplus of income over expenditure; or excess of expenditure over income.

Income effect
The change in the optimal quantity of a good when the purchasing power changes consequent upon a change in the price of the good is called the income effect.
INCOME TAX
Income tax in India is the tax which people living in this country pay to the
government. Tax assessors calculate the amount of money a person must pay based on his income for the financial year ending 31 March.

Increasing returns to scale
Increasing returns to scale is a property of production function that holds when a proportional increase in all inputs results in an increase in output by more than the proportion.

Indifference curve
Indifference curve is the locus of all points among which the consumer is indifferent.

INDIRECT LABOUR
Indirect labour is wages in the manufacturing accounts or costing accounts which do NOT belong to one particular product which the factory is making.
For example, A factory makes cars. The wages of the men who make the cars are direct labour (or direct wages). Their jobs have a direct relationship to the product which the factory is making. But people like supervisors and storemen deal with many jobs, not just car-making. Their wages are indirect wages.
Indirect labour is an expense item in the factory overheads section of the
manufacturing account.

Inferior good
A good for which the demand decreases with increase in the income of the consumer is called an inferior good.

Inflation
The phenomenon of rising prices of goods and services in general. It can come about due to a scarcity of supplies in relation to demand; this is known as ‘demand-pull inflation’. It may also result from an increase in the cost of some critical input, such as steel or petroleum, which then triggers off a gradual rise in prices in general; this is known as ‘cost-push inflation’.

Inflation risk
The chance that the rate of inflation will exceed the rate of return on an investment; also, the risk that future earnings will have reduced purchasing power because of an increase in average prices

Interest (1)
The price associated with using someone else’s money. Banks pay savers interest to encourage them to make deposits. Banks charge interest to borrowers, who pay this interest as a cost of using someone else’s money. In general, banks earn profits when the interest payments made on loans are larger than the interest used to attract savers to make deposits.
Interest (2)
Payments borrowers pay lenders for the use of their money. A corporation pays interest on its bonds to its bondholders.

Income method of calculating national income
Method of calculating national income by measuring the aggregate value of final factor payments made (= income) in an economy over a period of time.

INFLATION
Inflation means that it now costs more money to buy the same range of goods than it did at an earlier date. This is because of the general economic situation in the country or the world.

INSOLVENCY
To be insolvent - to become unable to pay one's debts.
INSOLVENT
When a person or business is not able to pay their debts they are insolvent. They may also be called bankrupt.

Isoquant
Isoquant is the set of all possible combinations of the two inputs that yield the same maximum possible level of output.

Intangible Fixed Assets
Fixed assets that cannot be physically touched; e.g. Patents, licences, intellectual property.

INSURANCE
Sometimes a person or business pays money (called an insurance premium) to an insurance company. There exists a contract where the insurance company agrees to pay money to the person or business if something bad happens.
Fire insurance on the contents of a shop. The shopkeeper may pay a premium of, say, Rs. 1000 to insure the contents of his shop up to a value of Rs. 250000 loss or damage by fire.
The insured person or business must pay the premium on a certain date each year, or the insurance policy does not exist.
There are other insurance policies for loss or damage from motor car accidents: or for injuries to workers from machinery in the factory.
In the accounts of a business insurance means the amounts paid in insurance premiums for insurance against loss or damage arising from certain events which might happen.

INSTALMENT
To pay in (or by) instalments means to pay what one owes in small amounts over a longer period of time.

INTEREST (1)
If a person or business needs more money than he has, he may borrow the extra money from another person or business. This is a loan. The borrower must pay interest to the lender for the use of the money.
The interest is usually calculated as a percentage of the amount borrowed for each year that it is borrowed. A borrower usually pays interest at regular intervals, For example, every six months. The payment of interest does not
reduce the amount of the loan.

Interest (2)
Payment for services which are provided by capital.

Intermediate goods
Goods which are used up during the process of production of other goods.
INVENTORY (1)
An inventory is a list of items. The name of the inventory will say what the inventory consists of.
For example, An inventory of plant in a business is a detailed list of all the plant and machinery in the business.

Inventories (2)
The unsold goods, unused raw materials or semi-finished goods which
a firm carries from a year to the next.

INVESTMENT (1)
To make an investment is to place or spend money with the aim of making an income or profit.

Investment (2)
The use of money for the purpose of making more money, to gain income,
increase capital, or both.

INVESTOR
An investor is a person who invests or makes investment. He is a person who spends money with the aim of making a profit.

ISSUED SHARE CAPITAL
A business that wishes to become a limited liability company makes an application to Registrar of Companies to become a registered company.
If the Registrar grants the application, one of the things he fixes is the amount of share capital, which he authorises the company to issue. This is the authorised share capital.
The issued share capital is the proportion of the authorised share capital which the company has issued to the present date. This means that they have raised money by selling shares to people. These people then become shareholders (part-owners) of the company.

John Maynard Keynes
Arguably the founder of Macroeconomics as a separate discipline. Born in 1883 and died in 1946.

JOINT STOCK COMPANY
Another name for a public company which is registered under the Companies Acts.

JOINT VENTURE
When two or more persons decide to join together to carry out a particular business transaction, this is a joint venture.

JOINT VENTURE ACCOUNT
The account in the books of a business which records all the transactions of the joint venture which the business has made.

JOURNAL
The journal is a book where accountants enter items which they cannot enter in any other book. The accountant makes adjustments and closing entries at the end of each financial year through the journal. He enters the names of the account he has debited and the account he has credited.
Journal Entry Posting of an adjustment (e.g. accruals, depreciation) to the accounts

Labour
Human physical effort used in production.

Land
Natural resources used in production – either fixed or consumed.

Law of demand
If a consumer’s demand for a good moves in the same direction as the consumer’s income, the consumer’s demand for that good must be inversely
related to the price of the good.

Law of diminishing marginal product
If we keep increasing the employment of an input with other inputs fixed then eventually a point will be reached after which the marginal product of that input will start falling.

Law of variable proportions
The marginal product of a factor input initially rises with its employment level when the level of employment of the input is low. But after reaching a certain level of employment, it starts falling.

LEASE
The name for a type of legal contract. The owner of a factory, shop or house who wishes to allow someone else to use it for a period of time makes a contract with this other person. The contract is called a lease.

LEDGER
Ledgers are double-entry accounting books or records. There are four main ledgers which businesses may use to record financial transaction:
cash book; purchases ledger; sales ledger; nominal ledger.
The four ledgers make up the ledger system, which is the basis of the double-entry system in accounting.

LEGAL CHARGE
Solicitors or barristers who give professional advice to business make a charge for their services. This is an expense of the business.

Legal tender
Money issued by the monetary authority or the government which cannot be refused by anyone.

Lender
One who lends; may be an individual, a business or a government

Lender of last resort
The function of the monetary authority of a country in which it provides guarantee of solvency to commercial banks in a situation of liquidity crisis or bank runs.
Letter of Credit
A financial instrument issued by a bank on behalf of a purchaser of goods, undertaking responsibility to pay a certain amount during a specified period, for goods delivered.

Leverage
Using long-term debt to secure funds for an organization. In the social investment world, often refers to financial participation by other private, public or individual sources.
LIABILITIES (1)
Liabilities are money which the business owes to other people.
For example, Money which it owes to people who have supplied goods to the business. Also money which it owes to the people who have given services to the business, such as electricity, telephone etc. Liabilities also include loans which other people have made to the business. Liabilities are part of the accounting equation :
Capital + Liabilities = Assets

LIABILITIES (2)
All the claims against a corporation. Liabilities include accounts, wages and salaries payable; dividends declared payable; accrued taxes payable; and fixed or long-term liabilities, such as mortgage bonds, debentures and bank loans.

LIABILITIES (3)
Things that are owed; financial obligations that must be paid. Debt is a common household liability.
LIABILITIES (4)
Debts of the business; amounts owed to others (For example, suppliers)

Liabilities, Total Liabilities
Total value of financial claims on a firm’s assets. Equals total assets minus net worth.

Limited Liability (1)
A term which conveys that the responsibility of shareholders, for debts and other LIABILITIES of their company, is limited to the extent of the amount remaining unpaid towards their shares in the company. In other words, each shareholder is liable to pay the full nominal value of shares held by him or her.

Limited Liability (2)
Limitation of shareholders’ losses to the amount invested.

Limited Recourse
Rights only to specifically stipulated assets to satisfy an unpaid debt.

LIQUID ASSET
Liquid assets are money or 'near-money'. They are items which a business can quickly turn into money, For example, bank deposits.

LIQUIDATION (1)
When a company is unable to pay its debts it goes into liquidation. A liquidator sells the assets and pays the creditors as far as
possible, but they may only receive part of the amount owing to them. This is also called a winding up.
A company may also go into liquidation because it not longer serves a useful purpose, and the shareholders no longer want it to
exist. In this case there will usually be enough money for the creditors to receive their money in full. The business shares the remaining
balance of money among the shareholders.
In business terms, it is said that a company goes into liquidation, but a person becomes bankrupt.

LIQUIDATION (2)
The process of converting securities or other property into cash. The dissolution of a company, with cash remaining after sale of its assets and payment of all indebtedness being distributed to the shareholders.

LIQUIDATOR
A liquidator is usually a professional accountant whose job is to finish the affairs of the company. This is called winding up the company. The liquidator sells all the assets of the business and pays all the expenses of the liquidation. He distributes the balance between the creditors of the company.
If the creditors have received their money in full, the liquidator pays the
remaining balance to the owners (or shareholders) of the company. There are laws which say how he must do this.

Liquidity (1)
The ability of the market in a particular security to absorb a reasonable amount of buying or selling at reasonable price changes. Liquidity is one of the most important characteristics of a good market.

Liquidity (2)
The ease with which a financial asset can be turned into cash

Liquidity trap
A situation of very low rate of interest in the economy where every economic agent expects the interest rate to rise in future and consequently bond prices to fall, causing capital loss. Everybody holds her wealth in money and speculative demand for money is infinite.

LOAN
Sometimes a business does not have enough capital for the business to function efficiently. The business may need to borrow money from a bank or from another person. The money which the business borrows is called a loan. If the business has to repay the loan within a short period (less than one year) the loan is a current liability. If the business does not have to repay the loan for more than one year, it is a medium or long-term liability. If a bank or other person lends money it charges an amount of interest.

Loan Agreement
A written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan.

Long run
Long run refers to a time period in which all factors of production can be varied.

LONG-TERM LIABILITY
A business which has a liability to someone for an amount of money may not have to pay this money until a date very far in the future. This is a long-term liability.
The shortest period in a balance sheet for a long-term liability is one year. Any liability which a business must settle in less than 12 months is called a current liability (or short-term liability).
Examples of long-term liability are : loans, loan stock, mortgages, debentures.
In the balance sheet accountants show long-term liabilities below capital.

Long-Term Loan
A loan which is not due to be repaid for at least twelve months

LOSS
A general meaning of loss is that a person no longer has something which he had in the past. In accounting, loss is the opposite of profit. In a business, where the expense is greater than the income, then the business has made a loss. The result is that the capital of the business is less than it was at the beginning of the financial period.

MACHINERY
Machinery in accounting usually means heavy factory machines which a business uses to make products. If the business owns the machinery it is a fixed asset on the balance sheet. The accountant provides an amount of
depreciation over the working life of the asset. This is an expense which the business has paid to make the products each year.

Macroeconomic model
Presenting the simplified version of the functioning of a macroeconomy through either analytical reasoning or mathematical, graphical representation.

Managed floating
A system in which the central bank allows the exchange rate to be determined by market forces but intervene at times to influence the rate.

MANAGEMENT
The senior employees of a business who control and administer its affairs.

Management Accounts
These usually comprise the profit and loss account and balance sheet, but there is no rule as to what financial information is presented, or how, as these accounts are for internal use only, to assist the company directors
with managing the business. Usually prepared monthly

MANUFACTURING EXPENSE
Manufacturing expenses are the expenses to do with the manufacture of goods.

MANUFACTURING, TRADING AND PROFIT AND LOSS ACCOUNT
This is really three separate accounts. A manufacturing company prepares this account at the end of a financial period. It consists of :
(a) Manufacturing account : shows the cost of making the goods. The
accountant transfers the total cost of the finished goods to :
(b) Trading account : shows the sales, from which the accountant
deducts the cost of sales. This leaves the gross profit which the
accountant transfers to :
(c) Profit and loss account : shows the administrative expenses and
selling expenses and a balance which is the net trading profit. He
adds to this any other income or profits to give the net profit for the
period.

Marginal cost (1)
Change in total cost per unit of change in output.

Marginal cost (2)
The cost of production and additional unit of a product.

Marginal product
Change in output per unit of change in the input when all other inputs are held constant.
Marginal propensity to consume
The ratio of additional consumption to additional income.

Marginal revenue
Change in total revenue per unit change in sale of output.

Market Rate
The rate of interest a company must pay to borrow funds currently. Program-related investments generally are offered at below market rates or at no interest rate.

Market supply curve
Market supply curve shows the output levels that firms in the market produce in aggregate corresponding to different values of the market price.

MATURITY (1)
In accounting this means the time when something becomes due. E.g. The date of maturity of a bill of exchange is 31 March. This is the date the
acceptor must pay the bill.

MATURITY (2)
The date on which a loan or bond comes due and is to be paid off.

Medium of exchange
The principal function of money for facilitating commodity exchanges.

MEMORANDUM OF ASSOCIATION
When a business registers as a limited company one of the things it must do is to send a printed memorandum of association to the Registrar of Companies.
The memorandum of association must state :
(a) the name of the company;
(b) the address of its registered office;
(c) the aims of the company;
(d) the amount of the capital, the number and nominal value of the
shares.
The basic idea of the memorandum of association is that it shows the relationship of the company with goes on inside the company.

Merger
Combination of two or more corporations.

Minimum payment
The smallest amount a person is required to pay in a given month on an openended credit account.

Money order
A form of payment that a person can buy for a specific amount and sign over to the person or firm named on the money order. People must pay a fee to obtain a money order. A money order cannot bounce because full payment is needed before the money order is issued.

Money Market
The Money Market is that segment of the financial markets wherein financial instruments having maturities of less than one year are traded. The money market is useful to any entity, whether a government, bank, business or wealthy individuals having a temporary surplus or DEFICIT. Hence, it may be viewed as a forum for adjusting their short-term LIQUIDITY positions. The open money market does not have any physical trading locations. It is essentially a network of the major players and intermediaries linked by telephones and other media. However, the Reserve Bank of India plans to introduce screen-based trading system for this segment.

Money multiplier
The ratio of total money supply to the stock of high powered money in an economy.

Monopolistic competition
Monopolistic competition is a market structure where there exit a very large number of sellers selling differentiated but substitutable products.

Monopoly
A market structure in which there is a single seller and there are sufficient
restrictions to prevent any other seller from entering the market.

Monotonic preferences
A consumer’s preferences are monotonic if and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the other good as compared to the other bundle.

MORTGAGE
Most people do not possess enough money to buy a house. So they borrow money from a building society. This loan is called a mortgage, and the building society has the security of the house if the borrower does not repay the loan. The person who borrows money from a building society pays an amount of interest on the loan he has received. Usually he does not borrow the total cost of the house. He pays about 15 per cent of the cost and obtains a mortgage for the other 85 per cent. The payment of 15 per cent is called a deposit. It is usual to pay back the amount of mortgage and interest over a period of 20-30 years.

Mutual fund
A pool of funds used by a financial services company to purchase a variety of stocks, bonds or money market instruments. A mutual fund provides diversification and is professionally managed by investment professionals.

NABARD
An acronym for the National Bank for Agricultural and Rural Development. Set up in 1982, it is the apex institution for agricultural and rural credit, though primarily, a REFINANCE extension institution.

Narrow money
Currency notes, coins and demand deposits held by the public in commercial banks.
NASDAQ
An acronym for National Association of Security Dealers Automated Quotations System, which is a nationwide network of computers and other electronic equipment that connects dealers in the over-the-counter market across the U.S. The system provides the latest BID and ASKING PRICES quoted for any security by different dealers. This enables an investor to have his or her transaction done at the best price. Due to NASDAQ, the over-the-counter market in the U.S. is like a vast but convenient trading floor on which several thousand stocks are traded.
National disposable income
Net National Product at market prices + Other Current Transfers from the rest of the World.

National Stock Exchange (NSE)
It is a nationwide screen-based trading network using computers, satellite link and electronic media that facilitate transactions in securities by investors across India. The idea of this model exchange (traced to the Pherwani Committee recommendations) was an answer to the deficiencies of the older stock exchanges as reflected in settlement delays, price rigging and a lack of transparency.

Net Assets
The total assets of a company less its total liabilities.

Net Book Value (NBV) (1)
The value of a fixed asset as shown in the balance sheet: cost less accumulated depreciation.

Net Book Value (2)
The amount at which fixed assets are included in the balance sheet, i.e. their historical cost or current value less the cumulative amounts provided for depreciation.

Net Cost
The cost of goods or services, excluding VAT.

Net Domestic Product (NDP)
Aggregate value of goods and services produced within the domestic territory of a country which does not include the depreciation of capital stock.

Net income
The amount of income left after taxes have been paid.

Net interest payments made by households
Interest payment made by the households to the firms– interest payments received by the households.

Net investment
Addition to capital stock; unlike gross investment, it does not include the replacement for the depletion of capital stock.

Net National Product (NNP) (at market price)
Gross National Product – Depreciation.

Net Present Value (NPV)
A DISCOUNTED cash flow measure to evaluated the viability of an investment proposal. It serves to determine whether the PRESENT VALUE of estimated future cash flows exceeds the investment on a project. The net present value is the difference of the sum of discounted cash flows and the outlay.

NET PROFIT
When the income of a business is greater than its expenses for a financial period it has made a net profit.

NET REALISABLE VALUE
The realisable value of an asset is the amount a business would receive if it sold the asset. Sometimes a business has expenses when it sells an asset, For example, expenses for removing the asset from the factory; expenses for transporting it to the buyer, commission to the sales agent etc.
To obtain the net realisable value of an article the business deducts the expenses of selling from the expected price.

NET SALES
Sales less sales returns. Business show this figure in the trading account.

Net Worth
The funds belonging to the shareholders of a company. Ordinarily, the term ‘Net Worth’ is synonymous with the funds belonging to the equity shareholders. However, a wider meaning of the term is as follows :
Net Worth = SHAREHOLDERS’ EQUITY + PREFERENCE SHARE CAPITAL Shareholder’s equity is the sum of PAID-UP equity CAPITAL and reserves.

Net worth
A person’s assets, or what a person owns, minus a person’s liabilities, or what a person owes.
Net Working Capital
Current assets minus current liabilities.

NNP (at factor cost) or National Income (NI)
NNP at market price – (Indirect taxes – Subsidies).

Nominal exchange rate
The number of units of domestic currency one must give up to get an unit of foreign currency; the price of foreign currency in terms of
domestic currency.

Non-tax payments
Payments made by households to the firms or the government as non-tax obligations such as fines.

Normal goods
Goods for which the demand increases with increase in the income of
the consumer are called normal goods.

Normal profit
The profit level that is just enough to cover the explicit costs and opportunity costs of the firm is called the normal profit.

NON-CUMULATIVE PREFERENCE SHARES
Holders of preference shares will usually receive a fixed rate of dividend. The company must pay this only out of profits. If the profits are not sufficient, the company will NOT pay the dividend.
If a company ceases to trade the holders of non-cumulative preference share will get the return of all their capital and any dividend due for the current year before ordinary shareholders get anything.

Odd Lot
An amount of stock less than the established 100-share unit.

Offer
The price at which a person is ready to sell. Opposed to bid, the price at which one is ready to buy.

Oligopoly
A market consisting of more than one (but few) sellers is called a oligopoly.

OPENING BALANCE
The balance which the business makes in the accounts of the ledgers at the beginning of a financial period. It is the same figure as the closing balance at the end of the previous period.

Open-ended credit
A form of credit that allows a person to borrow funds to make purchases for which there is no predetermined repayment period.

Open market operation
Purchase or sales of government securities by the central bank from the general public in the bond market in a bid to increase or decrease the money supply in the economy.

OPENING STOCK
Usually the stock which a business has at the beginning of a financial period, the profit from carrying out a manufacturing or trading operation.

Operating Cost
Also known as Overheads. The indirect costs incurred in running an organisation; e.g. heat, light, marketing costs,finance

Operating Leverage
The ability to magnify profits from increases in sales due to a firm’s operating costs being largely fixed than variable. When the proportion of VRIABLE COSTS is small, any increase in sales results in a significant impact on profitability beyond the BREAK-EVEN POINT, at which revenues equal total costs. The degree of operating leverage which guages the impact on profitability of a change in volume, is measured by the ratio :

Percentage change in OPERATING INCOME
—————————————————————
Percentage change in units sold or in sales

Operating Profit
The trading profit, before finance charges and tax

Opportunity cost (1)
Opportunity cost of some activity is the gain foregone from the second best activity.
Opportunity Cost (2)
The value or benefit from an alternative proposal. For example, investment decision, that is foregone in favour of another.

Opportunity Cost (3)
The potential benefit that is foregone from not following the best (financially optimal) alternative course of action.

Opportunity cost (4)
The highest-valued alternative that is given up when a choice is made

ORDINARY SHARES
Ordinary shares are the shares which ordinary shareholders own. In principle these shareholders are the owners of the company. They have a right to receive a share of the profits after the company has met all the other claims against it. For example, debenture interest, tax and preference share dividend Ordinary shares are sometimes called equity capital.

ORDINARY SHARE CAPITAL
The capital of a limited company which is divided into ordinary shares.

OTC Exchange of India (OTCEI)
A floorless national securities exchange with a screen-based system of trading. This modern market characterized by fully computerized operations, was promoted by the Unit Trust of India, ICICI, and SBI Capital Markets Ltd. Among others, in order to overcome problems such as the lack of transparency and delays in settlements that have plagued the older exchanges. Additionally, the prohibitive cost of a PUBLIC ISSUE through the conventional route also spurred the development of this alternative forum. OTCEI’s operations began in 1992 and its network consists of counters located all over the country, linked by computers and other electronic media. Companies with a small equity capital and certain permitted securities are traded on it. Each counter is the location of a member or dealer and serves as a trading floor. Members of the OTC Exchange include FINANCIAL INSTITUTIONS, subsidiaries of banks and certain MERCHANT BANKERS. s

OUTSTANDING RENT
The same as rent which is in arrears. It is the amount which a person or business owes for rent at a particular date.

OVERHEADS
When accountants prepare manufacturing accounts and in cost
accounting, they divide expenses into certain categories or types of
expense :
direct expenses;
overhead expenses (factory or works);
administrative expenses;
selling and distribution expenses.
Overheads (or overhead expenses) are expenses which are NOT directly concerned with the particular product which the company is manufacturing.

PAR VALUE
The face value of shares or debentures in a company. It is the same as nominal value.
Paradox of thrift
As people become more thrifty they end up saving less or same as before in aggregate.

Parametric shift
Shift of a graph due to a change in the value of a parameter.

PARTNERSHIP
A partnership is generally an association of between 2 and 20 people who carry on business together with the aim of making a profit.

PAT
Profit after tax

PATENT
When a person or business designs something new it does not want other people to be able to use the invention or design. The
person or business registers the invention or design with the Patent Office. This office checks that the design is new and then gives the
person or business a patent. This protects the invention for sixteen years, and no one else can use it during that time.
Business sometimes show the costs of development of the invention and the costs of asking for the patent as assets in the
balance sheet. The business writes off the costs over sixteen years, or the useful life of the patent.

PBT
Profit before TaxProfit after tax
PBIT
Profit before interest and tax; i.e. operating profit

PAYEE
A person who receives money from another person in payment of an amount due.

Payback Period
The time taken to recover the investment on a project.

PER ANNUM
A Latin phrase which means each year, or yearly.
For example, The interest charges on a loan of Rs. 10000 from a finance company are 15 per cent per annum. This means that the person who borrowed the money must pay Rs. 1500 each year for the interest charges.

PERCENTAGE OF SALES
Sometimes it is useful to management to know what percentage of sales the items of expense are, e.g. :

PROFIT AND LOSS ACCOUNT
It is most useful to compare these percentages with the figures for last year, and with any budget for next year, or with a similar business. These are financial ratios, which show how profitable a business is.

Perfect competition
A market environment wherein (i) all firms in the market produce the same good and (ii) buyers and sellers are price-takers.

Periodic expenses
Expenses that occur periodically, not regularly172. PERSONAL ACCOUNT
A personal account is an account in the sales ledger or purchases ledger of a business, which contains the name of a person or business.

Personal Disposable Income (PDI)
PI – Personal tax payments – Non-tax payments.

Personal Income (PI)
NI – Undistributed profits – Net interest payments made by
households – Corporate tax + Transfer payments to the households from the
government and firms.
PERSONAL LEDGER
The sales ledger and purchases ledger of a business are personal ledgers. The accounts in these ledgers are the names of people or businesses.

Personal tax payments
Taxes which are imposed on individuals, such as income tax.

PETTY CASH
A small amount of money which a business uses for small payments. The business records the payments in a petty cash book.

PETTY EXPENSE
A very small expense. Most businesses record these expenses in an analysed petty cash book. The word 'petty' comes from the French, meaning 'small'.

PLANT
Plant is the name for heavy equipment which a business uses to help make its products.
If the business owns the plant it is a fixed asset in the balance sheet. The accountant provides an amount for depreciation over the useful life of the plant.

Planned change in inventories
Change in the stock of inventories which has occurred in a planned way.

Portfolio (1)
Holdings of securities by an individual or institution. A portfolio may contain
bonds, preferred stocks, common stocks and other securities.

Portfolio (2)
A combination of assets held for its investment benefits, including financial and non-financial returns. The asset mix is usually varied in kind and size to maintain an acceptable level of risk and return.

POSTING
Businesses enter accounting transactions in the day books as they occur. Then they transfer the amounts to the correct accounts in the ledgers. They enter the amounts on the debit side or credit side, in agreement with the dual aspect concept. This is called posting.

PREFERENCE SHARES
The holders of preference shares are part-owners of a company together with holders of ordinary shares.
The preference share dividend comes out of the profits. Usually it is fixed rate each year (a percentage of the nominal value of the preference share capital). The company must pay the dividend on preference shares before the ordinary share dividend. If the company stops trading the preference shareholders receive back their capital before the ordinary shareholders.
There are different types of preference shares : For example, cumulative preference shares; non-cumulative preference shares; redeemable preference shares; convertible preference shares.

PRELIMINARY EXPENSES
Preliminary expenses are the expenses of forming a company. These include legal fees for drawing up the memorandum of association and articles of association; government taxes (called stamp duty) for registering the company; accounting charges for preparing profit forecasts etc. A company only pays these expenses once, at the beginning of the life of the
company, but it receives their benefit over the whole life of the company. It would not be fair to deduct the whole amount from the profits of the first year of the company's life. Accountants show the preliminary expenses as an asset in the balance sheet and write them off over several years of the company's life. They are a 'fictitious' asset.

PREMISES
Premises is the general name for buildings.

PREMIUM (1)
In accounting this means :
(a) any excess over the original or nominal price;
(b) anything which a business offers as an incentive to get the
employees to do more work;
(c) an insurance premium.

PREMIUM (2)
The amount by which a bond or preferred stock may sell above its par value. May refer, also, to redemption price of a bond or preferred stock if it is higher than face value.

PREPAID EXPENSE
A prepaid expense is the same as an advance payment. A business that makes a prepaid expense pays for a service before it consumes that service.
For example, On 1 December 1997 the ABC Co. pays Rs. 600 rent in advance for 6 months from 1 January 1998 to 30 June 1998. In the balance sheet on 31 December 1997 the business show the Rs. 600 payment as a current asset. It is NOT an expense for the financial period up to 31 December 1997. It will be an expense in the financial accounts for 1998.

Present value (of a bond)
That amount of money which, if kept today in an interest
earning project, would generate the same income as the sum promised by a bond over its lifetime.

Pre-shipment Credit
Funds lent by banks in rupees or foreign currency (PCFC) to exporters, prior to the shipment of goods. Pre-shipment finance can be in the form of packing credit, advance against cash incentives and others. Packing credit is offered to an exporter for purposes of packing and shipment and also manufacture of goods. Such credit may be in the form of a loan, CASH CREDIT or OVERDRAFT facility.

PRICE
The price of an item is the amount which a business asks a customer to pay for that item.

Price ceiling
The government-imposed upper limit on the price of a good or service
is called price ceiling.

Price-earnings Ratio
The market price of a share divided by EARNINGS PER SHARE. This number, also known as the ‘Multiple’, or ‘Multiplier’, is often used by investors and analysts to determine the upward potential of a share by comparing its multiplier to that of the particular industry as a whole. The multiplicand can be the expected earnings per share. One simple rule of thumb suggests that the P/E ratio can be as high as the anticipated growth rate of a company.

Price elasticity of demand
Price elasticity of demand for a good is defined as the percentage change in demand for the good divided by the percentage change in its price.

Price elasticity of supply
Price elasticity of supply is the percentage change in quantity supplied due to a one per cent change in the market price of the good.

Price floor
The government-imposed lower limit on the price that may be charged
for a particular good or service is called price floor.

Price line
Price line is a horizontal straight line that shows the relationship between market price and a firm’s output level.

PRIME COST
The total cost of direct materials, direct labour and direct expenses in the
manufacture or production of a particular product which a business sells.

Primary Market
The segment of FINANCIAL MARKETS in which securities are originated. Thus, the transactions for fresh offerings fo EUQUITY SHARES, DEBENTURES, PREFERNENCE SHARES, and other securities are collectively referred to as the primary market.

Principal
In commercial law, the principal is the amount that is received, in the case of a loan, or the amount from which flows the interest.

Private income
Factor income from net domestic product accruing to the private sector + National debt interest + Net factor income from abroad + Current transfers
from government + Other net transfers from the rest of the world.

PRO FORMA
A Latin phrase meaning 'in the form of'. Sometimes a business has to send to a customer an invoice with full details of the quantity and price of goods before the business sends the goods. This is called a pro forma invoice.

PRODUCTION COST
In cost accounting, and in the preparation of manufacturing accounts, this is the total of all the manufacturing costs. That is the prime cost plus factory overhead expenses. Or : the total cost less administrative
expenses and selling and distribution expenses.

Product method of calculating national income
Method of calculating the national income by measuring the aggregate value of production taking place in an economy over a period of time.

Production function
Production function shows the maximum quantity of output that can be produced by using different combinations of the inputs.

PROFIT (1)
Revenues – expenses = profit. Revenues are the money values of goods which a business has sold, or services which it has given, or income it has received in a period. Expenses are the money values of assets which the business has used up to earn the revenue of the same period.

Profit(2)
Profit is the difference between a firm’s total revenue and its total cost of production.
Profit (3)
Payment for the services which are provided by entrepreneurship.

PROFIT AND LOSS ACCOUNT
An account in the nominal ledger. It shows how much profit or loss a business made during a particular period of time, usually a year. All the revenue and expense accounts in the nominal ledger are closed at the end of the financial year and the balances transferred by journal entry to the profit and loss account.
The debit side of the profit and loss account shows purchases and expenses for the period.
The credit side shows sales and other income :
For example,
Purchases Rs. 200 Sales Rs. 600
Expenses Rs. 300

The balance here is a profit of Rs. 100.
E.g.
Purchases Rs. 300 Sales Rs. 500
Expenses Rs. 300

The balance here is a loss of Rs. 100.

PROFIT AND LOSS APPROPRIATION ACCOUNT
An extra part of the profit and loss account. It shows what a business has done with the profits.
In a company it will show on the credit side the net profit for the period. On the debit side it will show tax which the company owes, transfers to reserves, any dividends paid or proposed and the balance which the company has kept in the business.
In a partnership the profit and loss appropriation account will show : on the credit side, the net profit from the profit and loss account, and interest on drawing. On the debit side, it will show : partners' salaries, interest on capital accounts and balance of profits.

PROFIT SHARING RATIO
The ratio in which the partners of a business agree to divide the remaining balance of profits. For example, A, B and C agree to share the profits thus : A 5/10, B 3/10 and C 2/10. This is a profit-sharing ratio of 5 : 3 : 2.

Promissory Note
Promise to pay. Written contract between a borrower and a lender that is signed by the borrower and provides evidence of the borrower’s indebtedness to the lender.

Prospectus
The official selling circular that must be given to purchasers of new securities registered with the Securities and Exchange Commission. It highlights the much longer Registration Statement file with the Commission.

PROVISION FOR DEPRECIATION
Each year a business makes an estimate of the amount of depreciation on its fixed assets in that year. It debits the depreciation account with this amount. This is an expense. Then it credits the amount to the
provision for depreciation account. This account consists of the total of all the
depreciation which the business has provided up to that date on the fixed assets which the business still uses. This is also called the accumulated depreciation.

Provision
An amount charged to the profit and loss account in respect of expected losses

Proxy (1)
A document that facilitates the transfer of a share-holders right to vote in favour of another person who may represent and vote on his/her behalf at a general meeting of the company. The term proxy also refers to the person authorized to act on behalf of another.

Proxy (2)
Written authorization given by a shareholder to someone else to represent him or her and vote his or her shares at a shareholders meeting.

Proxy statement
Information given to stockholders in conjunction with the solicitation of
proxies.

Public Debt
The debt obligations of the Government of India comprising external debt, i.e., loans from foreign countries, international FINANCIAL INSTITUTIONS, etc. and internal debt that includes market loans, TREASURY BILLS, special bearer BONDS and special loans and securities outstanding. A very large portion of the internal debt obligations is held by the Reserve Bank of India.

Public good
Goods or services that are collectively consumed; it is not possible to
exclude anyone from enjoying their benefits and one person’s consumption does not reduce that available to others.

Public Issue
An invitation to the public at large to subscribe to shares or other securities of a company. A public issue entails numerous tasks such as organizing the syndicate of UNDERWRITERS, brokers and others, preparation of the

Purchasing power parity
A theory of international exchange which holds that the price of similar goods in different countries is the same.

PURCHASES RETURNS
Goods which a business has returned to a supplier because the business is not satisfied with them. They are also called returns outwards.

Rate of return
Earnings from a financial investment, stated as a percentage of the amount invested; usually calculated on an annual basis

Ratio Analysis
The use of financial ratios for assessing the financial ratios for assessing the financial performance and financial position of a company by means of various ratios that relate to the LIQUIDITY, turnover, profitability, etc., of a company.
RAW MATERIALS
The materials which a business uses to make products in its factory. They must be a part of the products which the business sells.
For example, In a factory that makes car tyres, rubber will be a raw material.
In a factory that makes chocolates, cocoa will be a raw material. Raw materials are a direct expense in the manufacturing account. Oil used for heating is NOT a raw material.

Real exchange rate
The relative price of foreign goods in terms of domestic goods.

Real GDP
GDP evaluated at a set of constant prices.

Receivables
Accounts receivable; an amount that is owed the business, usually by one of its customers as a result of the ordinary extension of credit,

REALISABLE VALUE
The value of an asset which a business would get if it sold it.

RECEIPTS AND PAYMENTS ACCOUNT
A summary of the cash book for a period. Social and recreational clubs and non-trading associations usually prepare this account.

Reinsurance
An arrangement under which an insurer shares the risk of large losses with another insurer. Through reinsurance, an insurance company spreads the risk of excessive loss on big contracts. The arrangement helps to dilute exposure and retain financial flexibility.

Rent
Payment for services which are provided by land (natural resources).

RENT OUTSTANDING
This is rent which is in arrears. Rent outstanding is the rent which a person has not paid on the due date to the owner of the building he is using.

REPAIRS
A business needs to keep its fixed assets in working order. Therefore it has to make payments for repairs from time to time. Repairs to factory machinery are an indirect expense in the manufacturing account. Repairs to office machinery are administrative expenses in the profit and loss account.

Reserve deposit ratio
The fraction of their total deposits which commercial banks keep as reserves.
Return
Earnings from an investment, usually expressed as an annual percentage rate

RETURNS INWARDS
Goods which customers send back to a business because they do not want them for various reasons. Sometimes they are called returns. If the business accepts the customer's reason it will send the customer a sales credit note showing the value of the goods returned.

RETURNS OUTWARDS
Goods which a business sends back to the supplier because the business does not want the goods for various reasons. Sometimes they are called returns. The supplier will send his credit note for the value of the goods returned. This will be entered in the purchase returns book.

Revaluation
A decrease in the exchange rate in a pegged exchange rate system
which makes the foreign currency cheaper in terms of the domestic currency.

REVALUATION ACCOUNT
Sometimes in a partnership it is necessary to revalue the assets of the
partnership. This may happen when a partner is leaving, and/or another is joining the business.
The business shows all the entries in connection with the revaluation in the revaluation account. It transfers the balance of the account to the partners' capital accounts in a way which the partners have agreed.

Revenue deficit
The excess of revenue expenditure over revenue receipts.

Ricardian equivalence
The theory that consumers are forward looking and anticipate that government borrowing today will mean a tax increase in the future to repay the debt, and will adjust consumption accordingly so that it will have the same effect on the economy as a tax increase today.

SALARY
A person who works for an employer receives money from the employer for the work that he does. If he receives this money regularly in fixed amounts, this is called a salary.
People who receive salaries generally have better status in their jobs than people whoreceive wages.

SALES
Every time business sells an item this is called a sale. The word sales includes sales for cash and sales on credit. If a business makes cash sales it is usual to total the amount of sales every day or every week. The book-keeper enters the totals of cash sales for a period on the debit side of the cash book. Then he posts the total to a sales account in the nominal ledger on the credit side. When a business makes credit sales it
enters each item in the sales day book and then posts to the personal accounts for each customer in the sales ledger on the debit side. Then it posts the total credit sales for the period to the credit side of the sales account in the nominal ledger.
In a retail store, the word sale sometimes means that the shop is selling goods at cheaper prices than usual.
In accounting sales usually means only the items which a business normally sells or makes. It does NOT include other items which a business might occasionally sell, like fixed assets (a shop, or plant or machinery or motor van or furniture).

SALES RETURNS
Goods which customers have returned to a business because they are not satisfied with them. They are also called returns inwards.

Saving
Income not spent on current consumption or taxes.

Savings account
An interest-bearing deposit account at a banking establishment that is not typically used for transactions and has no maturity date.

Scarcity
The condition that arises whenever limited resources are insufficient to provide for peoples’ basically unlimited wants.

SCRAP VALUE
The amount of money for which it is possible to sell a very old fixed asset in a bad condition.
For example, Mr X bought a motor car 11 years ago and it is now in a very bad condition. It is not possible to use it. Mr X takes the car to a
garage. The garage gives Rs. 2000 to Mr X for the car, because the garage can use parts of the car. This Rs. 2000 is the scrap value of the car.

SEBI
An abbreviation for Securities and Exchange Board of India, which is a regulatory body established under the Securities and Exchange Board of India Act, 1992. Its role is to protect the interests of investors in securities, to promote the development of securities markets and to regulate the same.

SELLING AND DISTRIBUTION EXPENSES
Selling and distribution expenses are part of the profit and loss account in the manufacturing, trading and profit and loss account.
Examples of selling and distribution expenses are : salesmen's salaries and commission, carriage outwards, depreciation of delivery vans, advertising and display equipment.

SELLING EXPENSES
Selling expenses are expenses to do with selling goods, such as salesmen's salaries, commission etc. They are an expense in the
trading and profit and loss account.

SELLING PRICE
The amount a person receives for a thing when he sells it. When a person (the seller) sells something to another person (the buyer) the selling price to the seller is the same as the cost price to the buyer.
If a person buys a thing he pays the cost price. If he later sells it he receives the selling price. In a business a person usually tries to sell things at a selling price which is higher than his cost price.

Semi-Variable Costs
The costs that vary with output though not proportionately. Examples are repairs and maintenance expenses.

SHARE
Shares are the money which people have invested in a limited company. As a reward they receive a share of the profits of the company, and have a share in the capital of the company.

SHAREHOLDER
A shareholder is the holder of a number of shares in a limited company.
To prove that he owns the shares he should have a share certificate with his name on it which states the number of shares he owns. The articles of association of the company state the right of the ordinary and preference shareholders. When a person makes an application to buy the shares of a company which is issuing shares for the first time, it is said that he
subscribes for the shares. If he is successful he is a shareholder and is sometimes called a member of the company.

Short run
Short run refers to a time period in which some factors of production cannot be varied.
Short-term goal
A goal that a person or organization plans to achieve in less than one year.
Shut down point
In the short run, it is the minimum point of AVC curve and in the long run, it is the minimum point of LRAC curve.

Sinking fund
Money regularly set aside by a company to redeem its bonds, debentures or preferred stock from time to time as specified in the indenture or charter.

Smart card
A plastic card, usually about the size of a credit card, which has been embedded with a microchip that manages and processes information. Because of the chip, the card can handle multiple applications such as personal identification, banking, and use in pay phones. The cards make it easy to carry data. They provide high data security and offer great convenience to users.
SOLVENT
A business which is solvent is making enough money to continue to trade and to pay its debts when these are due.

Speculation (1)
An approach to investing that relies more on chance and therefore, entails a greater risk. Speculation is driven by an expectation of a high rate of return over a very short holding period.

Speculation (2)
The employment of funds by a speculator. Safety of principal is a secondary factor.

Speculator
One who is willing to assume a relatively large risk in the hope of gain.

Speculative demand
Demand for money as a store of wealth.

Statutory Liquidity Ratio (SLR)
The fraction of their total demand and time deposits which the commercial banks are required by RBI to invest in specified liquid assets.

Sterilisation
Intervention by the monetary authority of a country in the money market to keep the money supply stable against exogenous or sometimes external shocks such as an increase in foreign exchange inflow.

STOCK (1)
1- Stock is a general name for the things which a business makes or
buys to resell at a profit. It is similar to goods. It particularly refers to
the goods which the business has at the end of a financial period.
The stock at the end of the financial period is also of course the stock
at the beginning of the next period.
2- Stocks are also another name for shares or securities in a public
company or government.

Stocks (3)
Those variables which are defined at a point of time.

Stocks (4)
Shares of ownership in a corporation.

STOCK EXCHANGE (1)
Another name for stock market.
It is the market where stockbrokers buy or sell securities (shares, debentures, bonds etc.) for their clients (or customers).

Stock exchange (2)
An organized market place for securities featured by the centralization of
supply and demand for the transaction of orders by member brokers for institutional and individual investors.

STOCK IN TRADE
In a shop, the goods which the shop keeps for sale to customers are its stock in trade.
In a manufacturing business stock in trade is all the raw materials, work in progress and finished goods which the business uses to make products for sale.

STOCK MARKET
Another name for the Stock Exchange.

Store of value
Wealth can be stored in the form of money for future use. This function of money is referred to as store of value.

SUBSCRIPTION
A subscription is a fee (an amount of money) which a person pays every year if he belongs to a club or society, or receives a magazine through the post.
A trade subscription is an expense of the business in the profit and loss account. It is a subscription to a society or association connected with the industry of the business.
A charitable subscription is a sum of money which a business gives to a charitable society. For example, cancer research etc.

Substitution effect
The change in the optimal quantity of a good when its price changes and the consumer’s income is adjusted so that she can just buy the bundle that she was buying before the price change is called the substitution effect.

SUNDRY CREDITORS
1- Sometimes a business owes money for goods or services which it
has received which are not part of its normal trade or business.
For Example, If it owes money for the purchase of a piece of land,
then this will be a sundry creditor.
2- Sometimes a business includes the total of sundry creditors,
accrued expenses and trade creditors in one figure in the balance
sheet as sundry creditors.
3- Some businesses call trade creditors sundry creditors.

SUNDRY DEBTORS
1- Sometimes someone owes money to a business for something
which is not in the normal trade of the business. For Example, If a
business had sold a building and had not received payment for it at
the date of the balance sheet, this would be a sundry debtor.
2- Sometimes a business includes the total of sundry debtors, prepaid
expenses and trade debtors in one figure in the balance sheet as
sundry debtors.
3- Some business call trade debtors sundry debtors.

SUNDRY EXPENSES
The same as sundries.

SUNDRIES
Very cheap items of expense in a business. A business does NOT buy many of them so it decides NOT to open separate accounts for different types of them. They are items which do not obviously come under any of the other expense items in the accounts of the business. Also a business may NOT buy certain items very often. If the business keeps subsidiary book with a number of columns for different items it may have a column for sundries. Then the business will enter in the sundries column any item which it cannot enter in other columns. At the end of the period the business will analyse the sundries column, and post the entries to the correct accounts in the nominal ledger.

Sunk Costs
The costs that have already been incurred because of decisions in the past. Consequently, decisions taken today cannot vary nor reverse what has already happened.

Super-normal profit
Profit that a firm earns over and above the normal profit is called the super-normal profit.

SUSPENSE ACCOUNT
Sometimes a business makes an error in book-keeping. But it cannot find the error in order to correct it.
The business can enter the amount of the error in a suspense account. This completes the double-entry system and the trial balance will balance.

Sweat Equity
Equity shares allotted to certain employees of company either on discount or for consideration other than cash, as a reward for providing know-how or sharing intellectual rights or some other value addition to the company.

Tangible Fixed Asset
Fixed assets that can be physically seen and touched; for example computers, desks, cars.

Taxes
Required payments to government.

Term
Refers to the maturity or length of time until final repayment on a loan, bond, sale or other contractual obligation.

Total cost
Total cost is the sum of total fixed cost and total variable cost.

Total fixed cost
The cost that a firm incurs to employ fixed inputs is called the total fixed cost.

Total physical product
Same as the total product.

Total product
If we vary a single input keeping all other inputs constant, then for different levels of employment of that input we get different levels of output from the production function. This relationship between the variable input and output is referred to as total product.
Total return

Same as the total product.

Total revenue
Total revenue is equal to the market price of the good multiplied by the quantity of the good sold by a firm.

Total revenue curve
Total revenue curve shows the relationship between firm’s total revenue and firm’s output level.

Total variable cost
The cost that a firm incurs to employ variable inputs is called the total variable cost.
TRADE CREDITOR (1)
1- Every business is part of a certain trade, e.g. the grocery trade, the furniture trade. This means that the business will buy goods for its factory or shop from suppliers in the same trade. The business will usually buy regularly from the same suppliers and will buy the goods on credit. These suppliers are the trade creditors of the business. The business will keep an account for each of the trade creditors in its purchases ledger.
2- Trade creditors is a liability in the balance sheet of a business. This is the total amount which the business owes to the trade creditors at the balance sheet date.

Trade Creditors (2)
Amounts owed to suppliers (Accounts Payable).

Trade Debtors
Amounts due from customers (Accounts Receivable).

TRADE EXPENSE
An expense of a business usually associated with the particular trade of the business.

TRADEMARK
Sometimes a business has a special sign or drawing which it uses for advertising to help sell its goods. It is intended to show that it is a
product that a particular company has made, in order to give the buyer confidence that he will get a satisfactory product.
If the company includes it in the balance sheet as an asset it is an intangible asset. Companies do not always do this because it is difficult to put a value on the asset.

TRADING ACCOUNT
An important account for a business. It shows the gross profit which a business has earned on its sales. For Example :

Trading Account
Particulars DR Particulars CR
Rs. Rs.
Opening Stock 15000 Sales 40000
Purchases 10000 Closing Stock 10000
Wages 12000
Gross Profit 13000
______ _____
50000 50000
______ _____ Businesses usually combine the trading account with the profit and loss account and call it the trading and profit and loss account.

TRANSACTION
A transaction in accounting is a financial activity between two people or businesses.
For Example,
Mr B sells goods value Rs. 1000 to Mr C.
Mr Z buys goods value Rs. 800 from Mr Y.
Mr B pays rent of Rs. 2000.
Mr B pays wages of Rs. 1000.
These are all transactions. A business records the two aspects of each transaction in its books.

Transaction demand
Demand for money for carrying out transactions.

Transfer payments to households from the government and firms
Transfer payments are payments which are made without any counterpart of services received by the payer. For examples, gifts, scholarships, pensions.

TRAVELLING EXPENSES
Sometimes an employee of a business has to travel by plane, bus, train or taxi as part of his job. The business pays an amount of money for this. Travelling expenses are an expense in the profit and loss account.

Traveler’s check
A form of check that can be used to obtain cash; the buyer of the traveler’s check pays a specific dollar amount to acquire these checks, which are issued in standardized packets by a traveler’s check issuer. The checks are written to a person or firm and signed by the person writing the check. Often these come with protection against loss or theft. Traveler’s check issuers usually charge a fee when they sell these instruments.

TRIAL BALANCE (1)
A business lists all the accounts in the nominal ledger on a statement called a trial balance. It enters the balances of each account as at one date in either the debit or the credit columns.
'As at 30 June' means that the book-keeper must take off the balances as they are at that date. It may be for various reasons that he does not take off the balances until 8 July or 15 July or later. But the balances which he takes off are those of 30 June, as if it was possible to calculate them on 30 June.
In the double-entry system there must be a corresponding debit entry for every credit entry. Therefore the total of each side of the trial balance should agree if the business has made arithmetically correct entries, For Example :
Trial balance as at 30 June 2009

Particulars DR CR
Rs. Rs.
Capital 1000 ---
Purchases 309 ---
Stock 800 ---
Sales --- 255
Returns outwards --- 15
Returns inwards 16 ---
Total creditors --- 141
Total debtors 29 ---
Cash --- 257
_____ _____
1411 1411
===== =====

Trial Balance (2)
A list of all balances on the Nominal Ledgers (General Ledgers) at a specific date.

TURNOVER (1)
1- The amount of sales which a company makes during a financial
period. It is sometimes called sales turnover. For Example,The
turnover for the year ended 30 September, 2002 was Rs. 30 Lakhs
compared with Rs. 25 Lakhs. in the previous year.
2- You will also find the name turnover with certain financial ratios
which relate the amount of sales to various assets which the
business has used during the year, for example, stock turnover.

Turnover (2)
Total sales in an accounting period; normally shown net of VAT.

Undistributed profits
That part of profits earned by the private and government owned firms which are not distributed among the factors of production.

Unemployment rate
This may be defined as the number of people who were unable to find a job (though they were looking for jobs), as a ratio of total number of people
who were looking for jobs.

Unlisted stock
A security not listed or registered on a stock exchange.

Unit of account
The role of money as a yardstick for measuring and comparing values of different commodities.

Unplanned change in inventories
Change in the stock of inventories which has occurred in an unexpected way.

UNSECURED LOAN
A loan for which a business has given NO security in regard to the repayment of capital to the lender.
If the business goes bankrupt, the person who has lent the money to the business will have to wait for his money in the same way as the ordinary creditors of the business. Therefore he may only get a part of his money back.
When the lender gave the money to the business he thought at that time that there was no risk and that his money would be repaid, or he thought that the rate of interest he would get from the loan was a good risk.

VALUATION
This means the value of an item that a person or business with expert knowledge has estimated. In accounting, companies which have owned land and buildings for many years sometimes obtain an up-to-date valuation of the assets from independent expert or valuers. If the company does this, the balance sheet must state that the assets are 'at a valuation'.

Value added
Net contribution made by a firm in the process of production. It is defined as, Value of production – Value of intermediate goods used.

Value of marginal product (VMP) of a factor
Price times Marginal Product of the factor.

Variable Cost
A cost that changes as output changes; for example, the cost of telephone calls will increase as the sales team make more calls

VARIABLE EXPENSE (1)
In cost accounting, business sometimes divide expenses into variable expenses, semi-variable expenses and fixed expenses.
Variable expenses change directly with the volume of production.
For Example, A TV set requires a valve at a cost of Rs. 10. The cost of valves varies directly with the number of TV sets which a business makes. If the business makes 100 TV sets the cost of valves is Rs. 1000. If it makes 90 sets the cost is Rs. 900.

Variable expenses (2)
Expenses that may change from week to week or from month to month

Variable input
An input the amount of which can be varied.

VAT
Value Added Tax.

Volume
The number of shares or contracts traded in a security or an entire market during a given period. Volume is usually considered on a daily basis and a daily average is computed for longer periods.

Voting right
Common stockholders’ right to vote their stock in affairs of a company.
Preferred stock usually has the right to vote when preferred dividends are in default for a specified period. The right to vote may be delegated by the stockholder to another person.

WAGE (1)
The amount of money which an employee earns each week. The total amount which he earns is called his gross pay (or gross wage) but the business deducts amounts for national insurance, pension fund and income tax. The amount he takes home is called his net pay (or net wage).
A person who receives his pay once a month at the end of the month receives a salary, not a wage.

Wage (2)
Payment for the services which are rendered by labour.

WORK IN PROGRESS
At the end of a financial period a manufacturing business will have some goods which are partly finished.
For Example, In a car factory at the end of a financial period there will be: the chassis of a lot of cars, cars with no engines or wheels, engines not yet complete, cars complete but not painted.
All these items are work in progress. Sometimes this is another name for partly manufactured goods (or partly finished goods).

Warrants
Certificates giving the holder the right to purchase securities at a stipulated price within a specified time limit or perpetually. Sometimes a warrant is offered with securities as.

Warranties
Statement attesting that certain statements are true. For instance, the borrower may warrant that it is a corporation, that it is entering into the agreement legally and that financial statements supplied to the bank are true.

Wholesale Price Index (WPI)
Percentage change in the weighted average price level. We take the prices of a given basket of goods which is traded in bulk.

WORKING CAPITAL (1)
The excess of current assets over the current liabilities of a business.

Working Capital (2)
Technically, means current assets and current liabilities. The term is commonly used a synonymous with net working capital. The term often also is used to refer to all short-term funding needs for operations (excluding debt service and fixed assets). A company’s investment in current assets that are used to maintain normal business operations. Net working capital, which is the excess of current assets over current liabilities is also interchangeable with working capital. Both reflect the resources in circulation to meet operating needs and obligations as they come due.

Write off
When an investment, such as a loan, becomes seriously delinquent or in default and is determined to be uncollectible, the lender may choose to charge the outstanding investment amount as an expense or a loss.

WRITTEN-DOWN VALUE
The balance of an asset account in the books of a company, after the company has made provision for depreciation or some other expected loss.

Year End
The financial accounting date at which a company prepares its statutory financial statements; i.e. the profit and loss account and balance sheet are prepared in accordance with company law and made public.

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Transfer Payments

2009-09-03T06:21:00.000-07:00

Definition : Transfer Payments are unilateral payments made by a party to the other without expecting anything in return. These are offered without accepting any productive service.
Example : If the Government pays Old Age Pension to its citizens, it is not expecting anything in return. Thus, it is a unilateral payment received by citizens without rendering any productive service.
Treatment : Such incomes and payments are often not included in measuring economic aggregates. For example, transfer payments are excluded while computing National Income of a nation.

QUASI RENT : ALFRED MARSHALL

2009-09-03T06:11:00.000-07:00

Quasi-rent is an analytical term in economics, for the income earned, in excess of post-investment opportunity cost, by a sunk cost investment. Alfred Marshall (1842-1924) was the first to observe quasi-rents.

In general, an economic rent is the difference between the income from a factor of production in a particular use, and either the cost of bringing the factor into economic use (Classical factor rent), or the opportunity cost of using the factor, where opportunity cost is defined as the current income minus the income available in the next best use (Paretian factor rent). In other words, economic rent is the difference between the income in the current use of the factor and the absolute minimum required to draw a factor into a particular use (from no use at all, or from the next best use), (see detailed page economic rent)

Many capital investments take the form of sunk cost investments in more or less highly specialized capital equipment, research and development, or training. For sunk cost investments, once the investment has been made, the cost of drawing the result into economic use may be minimal. For highly specialized equipment or training, the next best use may not pay much, so a large part of what is realized, constitutes a kind of rent. However, a sunk cost investment will only be made in the expectation that the resulting factor (e.g. capital equipment) can be employed to realize income above costs; the expectation of profitable income induced the creation of the capital factor.

While a true rent is an income in excess of what is necessary to bring a factor into productive use, a quasi-rent is only a Paretian Rent excluding the sunk cost investment. Viewed in an economic short term frame -- after the sunk cost investment has been made --.The income realized by a sunk cost investment constitutes a rent to the extent that it exceeds the amount that would be realized in the next best use of the sunk cost investment, e.g. (you already bought the hammer and there is nothing you can do about it. If you don't use it to drive nails, then maybe it will make a good paper weight). Viewed in an economic long-term frame, which includes the decision to make the investment, the same income is not a rent, but instead might legitimately be called interest.

The existence of sunk cost investments and quasi-rents point to important problems for both business strategy and public policy, particularly in connection with natural monopolies. A business enterprise might form, for example, to build and operate a bridge across a river, charging a toll for crossing. Efficiency requires that the bridge be fully utilitized, but any toll charged will discourage some crossings. A toll set at a rate, which keeps the bridge fully utilized, will not necessarily include any return on (or even recovery of) the investment in the bridge, while a toll, which does yield a return on the investment in the bridge will not necessarily result in full, efficient utilization of the bridge.

Government policy is sometimes designed or manipulated to ensure that particular sunk cost investments earn larger quasi-rents. Patents may be considered an example of such an intervention. In the absence of patents and other intellectual property law, the sunk cost investment in research behind an invention could only earn a quasi-rent to the extent that secrecy inhibited competitors from freely utilizing the results of the research. Once the sunk cost investment in research has been made, of course, efficiency would require that the results (i.e. the invention) be freely and widely disseminated, which would seem to preclude earning a return, a quasi-rent, on the research. Patents give a time-limited legal right to charge for the use of an invention, which creates a potential quasi-rent, and return on investment.

The Monk who sold his Ferrai : Robin S Sharma

2009-08-28T23:02:00.000-07:00

“The monk who sold his Ferrari” is a tale, which provides an approach to living a simple life with greater balance, strength, courage and abundance of joy. The fable format is a refreshing change from the tiresome listing of all the good things we could do for ourselves but do not. It makes the message being conveyed linger in our minds. Although most of the principles dealt with can be found in countless other books on self-help and spirituality, there is a difference in the way of Sharma has put things together.

This well crafted story by Robin S Sharma is the tale of Julian Mantle, a lawyer brought face to face with a spiritual crisis. Julian’s spark of life begins to flicker. He embarks on a life-changing odyssey and discovers the ancient culture of India. During this journey he learns the value time as the most important commodity and how to cherish relationships, develop joyful thoughts and live fully, one day at a time.

The eleven chapters are meticulously planned and flow seamlessly from one to the next. Julian Mantle, a very successful lawyer was the epitome of success. He had achieved everything most of us could ever want: professional success with an seven figure income, a grand mansion in a neighborhood inhabited by celebrities, a private jet, a summer home on a tropical island and his prized possession a shiny red Ferrari parked in the center of his driveway. Suddenly he has to come terms with the unexpected effects of his unbalanced lifestyle.

John, who is a friend as well as co-worker of Julian, narrates the story. He begins by describing Julian’s flamboyant lifestyle, his exaggerated courtroom theatrics, which regularly made the front pages of newspapers and his late night visits to the city’s finest restaurants with sexy young models.
Julian Mantle, the great lawyer collapses in the courtroom, sweating and shivering. His obsession with work has caused this heart attack. The last few years Julian had worked day and night without caring about his mental and physical health. That helped him become a very rich and successful lawyer but took a toll on his health and mental state. At fifty-three he looked seventy and had lost his sense of humor. Julian refused to meet any of his friends and colleagues at the hospital. One fine day he quit his law firm and took off without saying where he was headed.

Three years passed without any news from Julian. One day he paid a visit to his friend and former colleague John, who was now a cynical older lawyer. But Julian, in the past three years, had been miraculously transformed into a healthy man with physical vitality and spiritual strength.

Following his heart attack Julian Mantle had sold all his property (Yes, his Ferrari too) and left for India. The author tells us about Julian’s Indian odyssey, how he met the sages of Sivana who had a life changing effect on him. Julian Mantle shares his story of transformation, his secrets of a happy and fulfilling life with his friend John. Julian describes Sivana- a small place located in the Himalayas, the land of rose covered huts, placid blue waters with white lotuses floating, youth and vitality, beautiful glowing faces, fresh and exotic fruits. He tells John about the sages of Sivana who knew all secrets of how to live life happily and how to fulfill one’s dreams and reach one’s destiny.

Julian relates his experiences with yogi Raman the leader of the sages of Sivana and the person who taught Julian his secrets of a happy and fulfilling life. He narrates to John the fable that contained the seven virtues for a life abundant with inner peace, joy and a wealth of spiritual gifts. He tells John the techniques that he learned from yogi Raman on how to master our minds with simple techniques like “the heart of rose technique” and “the secret of lake technique”. He tells John how to cultivate the mind and how to use setbacks for expanding knowledge of the self.

He talks about setting and following our own purpose and teaches John the ancient art of self-leadership with techniques such as “do the things you fear” and “the 5 step method for attaining goals”. He waxes eloquent about the value of self-discipline and respect for time. He describes techniques such as “the ancient rule of 20” and “the vow of silence”. He teaches how to focus on the priorities and thereby maintain a balance and simplify life. He gives examples that prove that willpower is the essential virtue of a fully actualized life.

Julian teaches John the virtue of selflessness in serving others. He asks John to embrace the present and live in the present - “Now”, never to sacrifice happiness for achievements and to savor the journey of life and live each day as his last one. At the end he asks John to spread these secrets for the benefit of other people. Embracing John like the brother he never had, Julian leaves.

For the reader who might be in the rat race for material success and money, this book might be food for thought. But the message is a trifle too clichéd and the lectures too pedantic for the reader who is more or less conversant with the principles and insights garnered by Julian Mantle from the sages of Sivana. The presentation in the form of a story redeems the book to some extent. The book might perhaps be more satisfactory for readers who are unfamiliar with and hungry for oriental wisdom. All in all, a book of wisdom.

RELAVANT LINKS :

The Monk who sold his Ferrai (.pdf)
Robin Sharma Online Store
You Tube Animation

Biography of Dhirubhai Ambani

2009-08-27T09:18:00.000-07:00

Born in an impoverished village, at 16 he goes off to Aden to learn business. He returns 10 years later and starts a small company. By canny trading around the textile bazaars of Bombay, he corners the market in imported polyester, starts his own factory, outwits sclerotic bureaucrats in New Delhi who are trying to run the economy by regulation, and ultimately ignites the moribund Indian stock market with his vision of turning Reliance into a petrochemical and oil refining empire—a dream he realized not long before he died.

Mohandas Gandhi and Dhirubhai Ambani were the two most famous scions of the Modh Bania, a Hindu commercial caste based in the arid Saurashtra peninsula of India's western Gujarat state.

Each changed India. Ambani's public wore his textiles as durable suits and glittery saris. Indians invested by the millions in his Bombay-listed Reliance Industries, a sprawling conglomerate with $12.3 billion in annual sales that recently became India's first privately owned entrant to the Fortune 500. When Ambani died on July 6 at age 69 after nearly two weeks in a stroke-induced coma, the country's media recounted his rags-to-riches life as an Indian morality play.

Ambani's his great achievement was that he showed Indians what was possible. With no Oxford or Yale degree and no family capital, he achieved what the Elite "brown sahibs" of New Delhi could not: he built an ultramodern, profitable, global enterprise in India itself. What's more, he enlisted four million Indians, a generation weaned on nanny-state socialism, in an adventure in can-do capitalism, convincing them to load up on Reliance stock.

Still, Ambani seems destined to be remembered as a folk hero—an example of what a man from one of India's poor villages can accomplish with non-shrink ambition.

Biography of Bill Gates

2009-08-27T09:07:00.000-07:00

Born on October 28, 1955, Gates and his two sisters grew up in Seattle. Their father, William H. Gates II, is a Seattle attorney. Their late mother, Mary Gates, was a schoolteacher, University of Washington regent, and chairwoman of United Way International.

Gates attended public elementary school and the private Lakeside School. There, he discovered his interest in software and began programming computers at age 13.

In 1973, Gates entered Harvard University as a freshman, where he lived down the hall from Steve Ballmer, now Microsoft's chief executive officer. While at Harvard, Gates developed a version of the programming language BASIC for the first microcomputer - the MITS Altair.

In his junior year, Gates left Harvard to devote his energies to Microsoft, a company he had begun in 1975 with his childhood friend Paul Allen. Guided by a belief that the computer would be a valuable tool on every office desktop and in every home, they began developing software for personal computers.

In 1999, Gates wrote Business @ the Speed of Thought, a book that shows how computer technology can solve business problems in fundamentally new ways. The book was published in 25 languages and is available in more than 60 countries. Business @ the Speed of Thought has received wide critical acclaim, and was listed on the best-seller lists of the New York Times, USA Today, the Wall Street Journal and Amazon.com. Gates' previous book, The Road Ahead, published in 1995, held the No. 1 spot on the New York Times' bestseller list for seven weeks.

Gates has donated the proceeds of both books to non-profit organizations that support the use of technology in education and skills development

In addition to his love of computers and software, Gates is interested in biotechnology. He sits on the board of ICOS, a company that specializes in protein-based and small-molecule therapeutics, and he is an investor in a number of other biotechnology companies.

Philanthropy is also important to Gates. He and his wife, Melinda, have endowed a foundation with more than $21 billion to support philanthropic initiatives in the areas of global health and learning, with the hope that as we move into the 21st century, advances in these critical areas will be available for all people.

Gates was married on Jan. 1, 1994, to Melinda French Gates. The couple has two children: a daughter, Jennifer Katharine Gates, born in 1996; and a son, Rory John Gates, born in 1999.