CA Foundation Business & Commercial Knowledge Study Material – Other Business Terminology

CA Foundation Business & Commercial Knowledge Study Material – Other Business Terminology

Other Business Terminology

• Acquisition: Takeover of one firm by another.
• Administration: The process of determining and executing the policies and programmes of an organisation.
• Allowance: A fixed sum allowed by an employer to an employee e.g. house rent allowance.
• Bankruptcy: A situation when a firm’s assets are insufficient to pay its liabilities.
• Bottom line: Net profits.
• Business environment: All forces and factors external to the firm but influence its working and performance.
• Business facilitators: The individuals, organisations/institutions and arrangement that ease the setting up, operating and exit of business firms.
• By products: Products recovered from material discarded in a main process e.g. molasses in sugar industry.
• Corporate: A business entity distinct from its members e.g. a company.
• Corporate governance: The system that ensures that a company’s operations are conducted in an ethical manner and as per the law. It consists of board of directors, independent audit and financial reporting.
• Drawings: Cash or goods taken by the owner of the firm for personal/family use.
• Electronic commerce: Commercial transactions conduced over the Internet.
• Electronic filing: Fifing documents online e.g. fifing tax returns online.
• Franchise: The license given by one company to another to use the former name and sell its product/ service in a specified territory in exchange for payment of fee.
• Globalisation: The process of removing barriers to flow of goods, services, labour, capital and technology from one country to another leading to the emergence of a global economy.
• Goodwill: Money Value of a company’s reputation.
• Infrastructure: The basic facilities necessary for the operation of a society and business firms. It consists of buildings, roads, railways, posts, power supply, etc.
• Joint sector: Business enterprises owned jointly by Government and private sector.
• Joint products: Two or more products separated in the same processing operation which usually require further processing. For example, gasoline, lubricant, paraffin and kerosene are joint products, all produced from crude oil.
• Liberalisation: Systematic removal of restrictions on private business operations.
• Logistics: Movement of supplies to the production facilities (inbound logistics) and movement of products from centres of production to markets (outbound logistics).
• Merger: Combination of two or more independent firms into a single firm.
  Mission Statement: A statement that defines the business scope (who we are and what we do) of an organisation.
• Multinational: A company which has business operations in a country otherwise the country of its incorporation.
• Patent: An exclusive legal right to the inventor for use of the invention.
• Pestle: Political (P), Economic (E), Social (S), Technological (T), Legal (L) and Ecological (E) Environment.
• Privatisation: Selling of public enterprises to public sector.
• Private sector: All business enterprises owned and controlled by private persons.
• Public sector: All enterprises owned and controlled by the Government.
• Proprietorship: A business owned and controlled by an individual. Also known as sole proprietorship. Retained earnings: Undistributed profits of a company.
• Return: Rate of earning on an investment.
• Risk: Possibility of loss on an investment.
• Secondary sector: Manufacturing and construction industries.
• Subsidiary: A company owned and controlled by another company.
• Sustainable development: Development that can be sustained over generations or development
  without compromising ecology or environment.
• Term insurance: Insurance for a specific time period with no defrayal to the insured person and which become null on its expiry.
• Triple bottom line: Profit, people and planet i.e. simultaneous development of economy, society and ecology.
• Turnaround: Financial recovery of a loss making firm.
• Vision: The roadmap of a company’s future.
• Whole life insurance: An insurance policy the sum of which is payable after the death of the insured to his nominee.