ECON: Definition of Terms

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1. Accounting is the process recording all the transactions of 19. Callable a bond that contains clauses permitting
the company which affect any investment of Bond repayment before maturity
capital, so that at any time the results of the
20. Capacity or it is the ratio between the average load and
investments may be known.
Plant Factor the total available capacity
2. Acid-Test an index of short term paying ability
21. Capital Gain an increase in the value of a capital asset
Ratio
22. Capitalized is the sum of the first cost and the present
3. Amortization is any method of repaying a debt, the
Cost worth of all costs of replacement,operation
principal and interest included by a series of
and maintenance for a long time or forever
equal payments at equal interval of time.
23. Capital loss the reduction in the money value of a capital
4. Amortized a loan taht is discharged or repaid by a
asset
Loan uniform series of payments extending over its
duration. 24. Cash Flow it is the graphical representation of cash flows
diagram which are drawn in time scale
5. Annuity is a series of equal payments occuring at
equal period of time. 25. Certificate a negotiable claim issued by a bank of lieu of
of Deposit term deposit
6. Annuity Due is one where the payments are made at the
start of its period, beginning from the first 26. Chairman of highest position in the corporation
period the board

7. Appraiser the person engaged int he task of valuation 27. Collateral a type of bond whose security is the stocks or
Bond bonds of a well established subsidiary of the
8. Assets anything on value that is owned by an
corporation.
enterprise
28. Commodity any particular raw material or primary
9. Authorized grand total of the assets and operational
product
Capital capability of the corporation
29. Common it represents ordinary ownership without
10. Benefit Cost it is the ratio of the difference between the
Stock special guarantees of return
Ratio benefits and the disbenefits to the cost
associated with the particular project 30. Construction it is the sum of all cost necessary to prepare a
Cost construction project for operation
11. Bid bulletin additional information of perspective bidders
on contract documents issued prior to the 31. Corporation an aggregation of individuals formed for the
bidding date purpose of conducting a business and
recognized by law as fictitious person
12. Bilateral a market situation where there is one seller
Monopoly and one buyer 32. Coupon a document that shows proof of legal
ownership of a financial security
13. Bilateral a market situation where there are few sellers
Oligopoly and few buyers 33. Coupon a type of bond having a coupon attached to
Bond the bond for each interest payment that will
14. Bond it is the certificate of indebtedness of a
come due during life of the bond
corporation usually for a period and less than
10 years and GUARANTEED by mortgage on 34. Currency it denotes the fall i the exchange rate of one
certain assets of a corporation of subsidiaries. Depreciation currency in terms of others. The term usually
applies to floating exchange rates
15. Bookkeeping is the systematic recording of all business
transactions 35. Currency the deliberate lowering og the price of the
Devaluation nation's currency in terms of the accepted
16. Book Value it is worth the property which is listed on the
standard
book of accounts of an enterprise. iT IS
ORIGINAL COST MINUS THE TOTAL 36. Current this consist of cash and account receivable
DEPRECIATION. Assets during the next period or any other material
which will be sold.
17. Borrowed are those capital supplied by others on which
Funds or fixed interest must be paid and debt must be 37. Current represents claim against owners which must
Capital repaid at a specific time Liabilities be paid in the near future

18. Break Even it is the point in economic studies whreby 38. Debenture a bond without any security behind it except a
Point there is no profit. Bond promise to pay on a certain date by issuing
corporation.
39. Declining a method of computing depreciation in which 56. Dividends profit earned by a corporation , which is
Balance the annual charge is a fixed percentage of periodically distributed to the stockholders
Method the depreciated book value at the beginning
57. Duopsony a market situation where there are only two
of the year to which the depreciation applies.
buyers with many sellers.
40. Deferred it is a series of equal payments occuring at
58. Economic the length of time which the property may be
Annuity equal interval of time where the first payment
Life operated at a profit
is made after several periods , after the
beginning of the period. 59. Economic the profit derived from a project or business
Return enterprise without consideration of obligations
41. Deflation reduction in the level of national income and
to financial contributions or claims of other
output usuall accompanied by the fall in the
based on profit.
general price level.
60. Economics it is the study of the wealth, its value, creation
42. Demand it is the quantity of certain commodity that is
and distribution
brought at a certain price at a given place
and time. 61. Effective the true value of interest rate computed by
Interest equations for compound interest for a one-
43. Demand it is the ratio between the maximum power
year period
Factor demand and the sum of the connected loads
of the system 62. Effective it is the actual rate of interest on the principal
Rate of for one year.
44. Demented parties whose concent or signature in a
Interest
Persons contract is not considered intelligent.
63. Elastic it occurs when a decrease in selling price will
45. Depletion it is the decrease in the worth or value of the
Demnad cause a greater than proportionate increase in
property due to the gradual extraction of its
the volume of sales
contents
64. EngIneering it is the analysis and evaluation of the factors
46. Depletion annual charge that is made for the
Economy that will affect the economic success of
Cost maintenance of investment in wasting assets
engineering projects to the end that a
such as gas wells,oils, mines
recommendation can be made which will
47. Depreciation it is the decrease in value of the physical ensure the best use of capital
property due to the passage of time
65. Equipment a type of bond whose guaranty is in lien on
48. Depreciation annual charge that is made during the period Obligations railroads equipments
Cost of the useful life for the services rendered by Bond
the investment i the building, machinery and
66. Equity is the claims of anyone against the assets of
equipment in producing the products.
the enterprise
49. Depreciation the present worth of all the depreciation over
67. Escalatory the provision in the contract that indicates the
Recovery the economic life of the item
Clause possible adjustments of material cost and
50. Development it is the sum of all cost incurred by an labor cost.
Cost investor of a project up to the time that the
68. Exact an interest based on the number of days, 365
project is accepted by those who will
Simple for an ordinary year and 366 days fora leap
promote it
Interest year
51. Differential it is the ratio of a small increment of cost and
69. Face or Par it is the amount stated in the bond
Cost a small increment of output.
Value
52. Direct labor it is the actual work applied directly in the
70. Fair Value it is the value which is disinterested third party
process of manufacturing a certain product
, different from buyer or seller , will determine
53. Direct these are the materials which are included in in order to establish a price that is fair and
Materials the financial product itself acceptable to both the buyer and the seller.
54. Discount it is the difference between the present worth 71. Fixed these assets which will not be converted into
and the future worth of a negotiable paper. Assets cash and account receivable during the next
period or any other material which will be
55. Diversity is the ration between the sum of the
sold.
Factor maximum demands of the separate parts of
the system and the maximum demand of the 72. Fixed these are the liabilities which are not due for
entire system Liabilities payment until sometime more than one year
distant
73. Forced a saving which takes place because goods 90. Luxuries these are the products of services that are
Saving are not available for consumption rather than desired by human and will be purchased if
the consumer really want to save. money is available after the required
necessities have been obtained
74. Franchise is an intangible item of value arising from the
Value exclusive right of a company to provide a 91. Luxury Capacity of commodity to satisfy human
specific product wants
75. Going Value an intangible value which is actually 92. Marginal Cost the additional cost of producing one more
operating concern has due to its operation. unit
76. Goodwill is that element of value business has earned 93. Marginal that amount received from the sale of an
Value through the favorable consideration and Revenue additional unit of a product
patronage of its customers arising from it's
94. Marginal it is the ability of the last unit of the last
well known and well conducted policies and
Utility commodity which is consumed or acquired
operation
95. Market the place where the buyers and sellers
77. Gratuitous kind of obligation which has no condition
come together
attached
96. Market Value is the price a willing buyer will pay for a
78. Gross gross profit , sales less costs of goods sold
willing seller of the stock
Margin as percentage of sales
97. Maximum it is the maximum load that occurs in a
79. Group is a method consists of the computation of a
Value certain interval of time within a given period
Depreciation single annual depreciation charge for a group
Method of similar assets using their average life 98. Monopoly exists when a unique product is available
from one seller and where new sellers are
80. Hard a currency traded in a foreign exchange
prevented from selling the same or similar
Currency market for which the demand is consistently
products
high in relation to its supply
99. Monopsony A market whereby there is only one buyer
81. Increment it refers to any increase in cost
of an item which there are no good
Cost
substitute
82. Inelastic it occurs when a decrease in a selling price
100. Mortgage this is the most common type of Bond.
Demand will cause a less than proportionate increase
Bond
in sales
101. Necessities these are the products or services thatt are
83. Interest the amount of money paid for the use of
required to support human life.
money called a capital for a certain period of
time 102. Nominal Rate rate of interest which is specified to a
Of Interest certain number of periods per year
84. Interest the ratio of the interest payment to the
Rate principal for a given unit of time and usually 103. Obsolescence this refers to changes in conditions
expressed as percentage of the principal. externals to the equipment under
consideration
85. Joint Bond a type of bond issued jointly by two or more
corporations. 104. Ordinary the first payment is made at the end of the
Annuity period
86. Law of When one of the factors of production is fixed
Diminishing in quantity or is difficult to increase, increasing 105. Ordinary is an interest which is computed on the
Return other factors of production will result in a less Simple basis of the banker's year which is equal to
proportionate increase in output. Interest 360 days

87. Law of when free competition exists, the price of a 106. Ownership is the equity of person who normally
Supply and product will be that value where the supply is possesses an assets
Demand equal to the demand 107. Partnership it is the association of two or more persons
88. Liabilities are debts or the claim other than the owners for the purpose of engaging a business for
upon the assets profit

89. Load Factor is the ratio between the average demand and 108. Patent exclusive right granted by the government
the amximum demand 109. Perfect it occurs when a certain product is offered
Competition for sale by many vendors or suppliers and
there is no restriction
110. Perpetuity is a series of equal payments which the payments continue indefinitely
111. Physical Actual Counting or determination of the actual quantity pf the materials on hand as of given date
Inventory
112. Power Factor is the ratio of the output of the power in watts and the product of volts and amperes
113. Preferred Stock represent ownership
114. Prepaid Expenses these are the assets in the form of money paid for certain materials not yet delivered or services not et
rendered to the company
115. Prepaid Income this arises when abusiness receives payment for a service before it actually renders service
116. Present Worth mathematical equation also known as the present value of an annuity of one
Factor
117. Prime Cost the sum of the direct labor costs and the direct material cost
118. Private type of ownership in business where individuals exercise and enjoys the right in their interest
119. Proprietorship is the simplest form of business organization wherein the business is own entirely by one person
120. Rate-Base Value is the value assigned to the property for the purpose of establishing rates
121. Rate of Interest the amount earned by one unit of principal during a unit of time
122. Rate of Return is the measure of the financial efficiency of the investment
123. Registered Bond the owner's name is recorded in the books of corporation
124. Risks the deviation of actual outcomes
125. Salvage Value the amount that can be obtained from the sale after its useful life
126. Supply is the quantity of certain commodity
127. Tort an evil wrong commitment
128. utility is the capacity of commodity to satisfy human want
129. variable cost cost that vary with the output
130. working capital also known as circulating capital