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.