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American Business Glossary | American Business Dictionary
Key Word
 
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ABLE:
Able is defined as when a buyer is ready to complete the transaction or completions of fully executed contract when they have sufficient funds and are ready to sign the documents which required transferring title to a Business or owner ship.
ABOVE-THE-LINE:
In Marketing, relating to marketing expenses on advertising in media such as press, radio, television, cinema, and the World Wide Web, on which a commission is usually paid to an agency.
ABSENTEE OWNER:
This is a Generic term and it’s used where the business day to day operations are run by the employees only.
ABSORBED ACCOUNT:
It’s an account that has lost its own (separate) identity by being combined with related accounts in the preparation of a financial statement.
ABSORBED BUSINESS:
When two or more businesses are combined into a one or single business or entity
ABSORBED COSTS:
These are the indirect costs associated with manufacturing, for example, insurance or property taxes.
ABSORPTION COSTING:
It’s a type of accounting practice in which fixed and variable costs of production are absorbed by different cost centers.
ABUSIVE TAX SHELTER:
When someone makes a claim illegally in order to avoid or minimize tax.
ACCELERATED COST RECOVERY SYSTEM:
A system used in computing the depreciation of some assets acquired before 1986 in such a manner that reduces taxes.
ACCELERATED DEPRECIATION:
Method recognizing higher amounts of depreciation in the earlier years and lower amounts in the later years of a fixed asset's life
ACCELERATION CLAUSE::
It’s a clause in a mortgage or loan. If the borrower fails to stand by her obligations under the mortgage, the lender has the legal right to demand that the full principal of the mortgage may become due and payable immediately upon the failure.
ACCEPTANCE:
A positive response to an offer or a counter-offer made by a party that creates a binding agreement between the parties
ACCESS:
It is a right to enter a business premises. Access may be restricted to certain times, to certain persons and to certain purposes (i.e. access for the purpose of inspection).
ACCESSIBILITY:
It can be explained, the ease with which one can reach a certain place, person or thing.
ACCESSORY GOODS:
These can be defined as the products required by commercial operations to conduct business, such as: office copiers, automobile wheel balancers, auxiliary power supplies, air compressors, etc.
ACCOUNT:
An account is a record of a business transaction in the general ledger that is used to collect and store debit and credit amounts. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged.
ACCOUNT BALANCE:
The difference between the debit and the credit sides of an account at the end of a reporting period.
ACCOUNTANT:
An accountant is a highly trained professional who is responsible for monitoring and recording the flow of money through an agency, business or organization. The accountant also verifies the accuracy of all monetary and cash transactions and makes sure that all transactions are legal and are following current local, state and federal guidelines.
ACCOUNTING COST:
It is the cost of maintaining and checking the business records of a person or organization and the preparation of forms and reports for financial purposes.
ACCOUNTING INSOLVENCY:
A business scenario of a company where its liabilities to its creditors exceed its assets
ACCOUNTING PERIOD:
It can be calculated as a time interval at the end of which an analysis is made of the information contained in the bookkeeping records. Also the period of time covered by the profit and loss statement
ACCOUNTING RATE OF RETURN:
It can be explained as the ratio of profit before interest and taxation to the percentage of capital employed at the end of a period. Variations include using profit after interest and taxation, equity capital employed, and average capital for the period
ACCOUNTS PAYABLE:
It is an obligation by a business to pay an amount to a vendor or other creditor for goods and services purchased on credit.
ACCOUNTS RECEIVABLE:
It is defined as a financial claim by a business against a customer arising from a sale of goods or services on credit. One measure of the health of a business is how fast customers pay off their accounts. Less that 30 days is good, 30 to 60 days may be okay, and over 60 days could be a problem
ACCOUNTS RECEIVABLE FACTORING:
The buying of accounts receivable by a third party (called factor) at a discount with the aim of making a profit from collecting them.
ACCRUAL BASED ACCOUNTING:
An accounting method in which income and expenses are entered into the books at the time of contract versus when payment is received or expenses incurred.
ACCRUAL BASIS:
It is the most common method of keeping accounts that shows expenses incurred and income earned for a given fiscal period, even though such expenses and income have not been actually paid or received in cash.
ACCRUED DEPRECIATION:
The amount of value of a property or chattel which has already accumulated, resulted by the decrease in the value of that property due to the passage of time and the use of the property or chattel.
ACCRUED INTEREST:
The interest which has already been earned but has not yet been paid
ACCUMULATED DEPRECIATION:
It is the total depreciation of an asset that has been charged as an expense to date.
ACKNOWLEDGEMENT:
A statement by a person to the effect (or recognizing) that they are aware of a certain fact.
ACQUISITION COST:
This is the cost to the buyer of obtaining title to anything. Acquisition cost includes the cost of the transaction of obtaining title, including legal fees and expenses, interest charges on mortgages, Business transfer tax, etc.
ACQUISITION::
The process of receiving title to or ownership of something
ACT OF GOD:
These are the circumstances used in insurance policies; an event caused by natural forces such as rain, lightning, floods or earthquakes which consequences in damage to property or chattels.
ACTUAL AUTHORITY:
This term is used in reference to an agent or representative. The limits of the power (given orally or written) the agent or representative has to bind her principal to an agreement or to a statement.
ACTUAL CASH VALUE:
It’s an insurance term, the value of equipment calculated by subtracting the decrease in value caused by age and wear and tear from the cost of replacing the Equipments entirely.
ACTUAL DAMAGES:
An award of the court to compensate an injured party for injury or losses incurred as a direct result of the actions or omissions of another party.
ACTUAL EVICTION:
Wrongful removal of a tenant from possession of a premises either by force or legally, usually by a landlord, contrary to the terms of the lease
ADDENDUM:
Is a supplement to a document that forms part of it. Similar to a Schedule to an Agreement of Purchase and Sale
ADDITIONAL PRINCIPAL PAYMENT:
A one-time or lump-sum payment made by a borrower in addition to the scheduled payments on a loan or mortgage which reduces the principal owing on the debt.
ADJUSTABLE RATE MORTGAGE (ARM)::
Also known as a Variable Rate Mortgage or Floating Rate Mortgage, a loan secured against land which has an interest rate that changes periodically according to some outside index -- such as the federal prime rate or the interest rate paid on government bonds -- over the term of the mortgage. The change in interest rate will result in a change in the periodic payments due under the mortgage.
ADJUSTED COST BASE:
It’s an income tax term used for the purposes of determining capital gains or losses. The acquisition cost of a property or chattel, plus the cost of any improvements or investments to the property.
ADJUSTED NET INCOME:
This is a cash amount of which is equivalent to a real world estimate of income. ANI includes an adjustment for the inevitable depreciation of assets.
ADJUSTED SALES PRICE:
It is known as the result of estimating the value of a Business by comparison to comparable sales. Take the actual sale price of a Business comparable to the subject Business, then add the value of any extras which the subject property has but the comparable business did not, then subtract the value of any deficiencies in the subject Business not shared by the comparable Business.
ADJUSTMENT DATE:
The term is most commonly used in real estate transactions, where the adjustment date refers to the agreed-upon date on which certain costs such as property taxes and interest will be adjusted between the buyer and the seller.
ADJUSTMENT INTERVAL:
It is also termed as Adjustment Period. The period of time (i.e. week, month, and year) between changes in the interest rate charged on an adjustable-rate mortgage.
ADJUSTMENTS:
In Business sales, the manipulations made to the selling price to account for the advantages and disadvantages of the subject Business, market conditions etc. When closing a Business transaction, the changes to the purchase price made as a result of realty taxes over- or under-paid by the Vendor, fuel oil provided, etc.
ADMINISTRATIVE EXPENSE:
These are the expenses chargeable to the managerial, general administrative and policy phases of a business in contrast to sales, manufacturing, or cost of goods expense.
ADMINISTRATOR:
The person who is appointed by a Court, to deal with the estate of a deceased person, who died without leaving a will i.e.(who dies "intestate"). Note: an executor is a person who is named in a will to deal with the estate of a deceased person.
ADVANCE:
To pay back a portion of money borrowed under a mortgage or loan before the loan instrument requires the money to be delivered.
ADVERTISING:
A form of public communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideas, or services.
AFFIANT:
The individual who swears an affidavit.
AFFIDAVIT:
It is a sworn statement setting out facts which the affiant declares are true. Sworn before a Commissioner for swearing Oaths or before Notary Public or any other public officials
AFFIRMATION:
It is a solemn and formal declaration regarding the truth of a statement of facts, instead of a sworn oath. Often used when a person's religious convictions preclude swearing an oath.
AFTER-TAX CASH FLOW:
These are defined as the net proceeds from an income-producing property, after all costs (taxes, mortgage interest, maintenance costs etc.) of owning and operating the business have been deducted.
AFTER-TAX PROCEEDS FROM RESALE:
These are the net proceeds from the sale of a Business. The sale price minus legal fees and expenses, realty commission, any taxes paid, mortgage payout etc.
AGENCY:
It can be explained as the relationship between a person (the Principal) and another person (the Agent) who was appointed, selected, empowered, given authority by the Principal to represent the interests of the Principal in dealings with third parties and to bind the Principal to statements, warranties or contracts.
AGENCY BY ESTOPPEL (OSTENSIBLE AGENCY:
The agency relationship created by the actions, behavior or statements of the Principal and/or the Agent upon which a third party relies. Ostensible Agency may be found by a court where no agency relationship was intended by the Principal.
AGENCY BY NECESSITY:
An agency relationship in a situation, where the authority to represent is imputed to the Agent as a result of an emergency situation to protect the interests of the Principal.
AGENCY BY RATIFICATION:
An agency relationship which is formed after the fact when the Principal agrees to be bound by the actions of another person who was acting without authority.
AGENT:
An individual who is authorized to act for or represent another person in dealing with a third party
AGREEMENT:
It is a legally binding contract between two or more people, representing a meeting of minds on one or more issues.
AGREEMENT IN PRINCIPLE:
A preliminary agreement reached between the purchaser and seller of a business that outlines the general terms under which more detailed negotiations will be undertaken.
AGREEMENT OF SALE:
Also known as Purchase Agreement, Agreement of Purchase and Sale etc. A legal contract in which one party agrees to purchase and another agrees to sell a property or chattel. Contains terms and conditions of the transaction and is signed by the parties.
ALIENATION CLAUSE:
A term in a mortgage which allow the creditor to demand payment in full of principal and interest due upon the sale of the Business or transfers title of the property.
ALLOCATION OF PURCHASE PRICE:
In an asset sale, the amount of purchase price must be allocated to certain assets; the balance is goodwill.
ALTERATION:
It is a change made to an executed contract which has not been approved by the parties to the contract. An alteration may constitute fraud if it has the impact of significantly affecting the rights of a party to the contract and was intentionally carried out by another party. If fraud is found, the innocent party may void the contract.
AMORTIZATION:
The process of preparation of a payment plan for a loan which allows for equal payments to be made to the creditor at consistent intervals over the life of the loan (the amortization period). Each payment covers interest accrued over the interval period with the remainder of the payment being applied to reduce the principal owed. If every payment is made on time and in full over the amortization period, the loan will be completely repaid at the end of the amortization period.
AMORTIZATION SCHEDULE:
The printed table or a payment plan of the payments to be made on an amortized loan scheduling the date and amount of each payment, the amount of each payment which will be applied to interest and to principal and the balance of principal still outstanding on the loan after the payment is made.
ANALYSIS:
The process of breaking an idea or problem down into its parts; for analysis or a thorough examination of the parts of anything
ANCHOR TENANT:
Also called as “Draw Tenant, Key Tenant” is description of a tenant in a shopping mall or centre. A "name” or a large store that will draw retail traffic to the mall and, therefore, benefits the other stores in the mall. Usually receives a favorable lease.
ANNUAL DEBT SERVICE:
It is the total amount required to service a loan in a given year.
ANNUAL LOAN CONSTANT:
It is also termed as a mortgage constant. Ratio of Annual Debt Service to original principal of the loan
ANNUAL REPORT:
The yearly report generated by a company at the close of the fiscal year, stating the company's receipts and disbursements, assets and liabilities.
ANTICIPATION, PRINCIPAL OF:
An approach to assess the future value of Business based on possible contingencies (positive or negative).
ANTITRUST LAWS:
The Law encouraging competition and a free market, and which outlaw monopoly in certain businesses.
AO (ACCEPTED OFFER):
A short form used by agents to designate that an offer to make a purchase has been accepted by the offeree.
APPARENT AUTHORITY:
Also called "ostensible authority", where an agent compels, by actions, omissions or statements, a third party to believe the agent has the authority to bind a principal. The authority to bind is apparent due to the behavior of the agent but may not actually exist.
APPLICATION:
A form to be filled out in order to allow a lender to consider a person for a mortgage or loan. The application contains personal and financial information on the applicant.
APPLICATION FEE:
The fees the lender charges the applicant. May include costs of a property appraisal and a credit report on the applicant and it may also cover the costs of processing the loan application. May be payable by applicant even if loan is not approved.
APPOINTMENTS:
The chattels or decorative touches that may be affect the value of a property.
APPORTIONMENT:
It is also called as adjustment. The division of responsibility for certain costs between the parties to a transaction, such as realty taxes.
APPORTIONMENT CLAUSE:
A clause in insurance polices. It allows the payment of compensation for a loss to be divided between insurers holding different policies on the same Business.
APPRAISAL:
This is an estimation of the value of a property or business on a certain date given by a professional, usually after an inspection of the property.
APPRAISAL PRINCIPLES:
These are the elements to be considered by an appraiser in appraising the value of a Business, such as competition, supply and demand.
APPRAISAL PROCESS:
A standardized approach to appraising a property, to allow for accuracy, consistency and estimate it’s true value.
APPRAISAL REPORT:
Documentations to support an appraisal value of a property. It varies in length but sets out elements considered, positive and negative aspects of property etc.
APPRAISED VALUE:
The estimated market value of a Business or Real Property or both on a given date, given by a qualified and licensed appraiser, as a result of an inspection of the property, books and other material for a consideration of other market forces.
APPRAISER:
A well qualified professional who has been trained to assess the value of Business.
APPRECIATION:
The increase in the value of a Business, over the passage of time as a result of many factors: market conditions, inflation, changes to area around the property, etc.
APPROACHES TO VALUE:
This is a different methodology by which the appraisers estimate the value of a property. Include: (1) cost approach, (2) comparison approach, and (3) income approach
ARBITRATION:
This is An Alternative to Dispute Resolution method. It is a legal approach which allows an objective third party to settle disputes between parties without resorting to court. Binding arbitration involves the parties agreeing to be bound by the decision of the arbitrator.
ARMS-LENGTH BUYER:
This is transactions of any individual, firm, or other entity with whom you deal regarding the sale of your business and who has no prior financial or family involvement with you.
ARREARS:
It is the unpaid, overdue debt or unfulfilled obligation, under a payment plan or amortization schedule. Could lead to enforcement of loan agreement by lender
ARTERIAL STREET:
A main thorough fare or through road which is a high capacity urban road, which is designed to carry traffic through an area where that area is not the destination of the traffic.
ARTICLES OF INCORPORATION:
A legal document filed with the state that sets forth the purposes and regulations for a corporation. Each state has its different regulations.
ARTIFICIAL PERSON:
This is an opposite of a natural person. A corporation or other legal entity that has at least few of legal rights of a human being.
AS IS:
Implied in most Agreements of Purchase and Sale, suggests the buyer is accepting the property in its current condition and releases the Vendor from any liability for problems found before or after closing.
ASKING PRICE:
This is also called as “Looking Price” or Offer price or Listed Price or Intended Price. This is the price at which the Vendor or Seller advertises the Business or Property. . When used in the advertisement, may suggest flexibility on the part of the Vendor regarding the price.
ASSESSMENT:
It is generally, the apportionment of liability of a general cost among individuals.
ASSESSOR:
A person who is employed by the Government entity, who’s the primary duty is to estimate the value of Business or property for the purpose of taxes and insurances.
ASSET SALE:
It is the purchase of certain assets and/or liabilities, leaving the seller the remainder as well as the corporate entity.
ASSET-BASED LENDERS:
It’s a secured way of lending based on a specific asset or the combined credit of assets Commercial lenders who are willing to take on more risk than commercial banks, lending against accounts receivable and inventory and being subordinate to commercial banks.
ASSETS:
Any real or intellectual property owned by the individual or enterprise that has a positive financial value. Accounts receivable are an asset.
ASSIGN:
It is to transfer interest in a property, contract, right etc.
ASSIGNEE:
The individual to who’s an interest is transferred. An assignee of an Agreement of Purchase and Sale may buy the Business and enforce the contract in the same fashion as the original party.
ASSIGNMENT:
It is the transfer of any right, claim or interest to another person or corporation. Often used to refer to the transfer of a mortgage from one lender to another.
ASSIGNMENT OF LEASE:
Subject to the terms and conditions of the lease, the transfer of either the lease or the lessee's interest on a lease.
ASSIGNOR:
The individual who assigns a right or interest to another person.
ASSOCIATE BROKER:
A qualified real estate broker who works with other principle broker.
ASSUMABLE MORTGAGE:
A mortgage that can be taken over ("assumed") by the purchaser when a home is sold. If interest rates have risen, an assumable mortgage at a low rate may prove a selling point for the property.
ASSUMPTION CLAUSE:
A provision in a mortgage contract that allows the seller of a home to pass responsibility to the buyer of the home for the existing mortgage. In other words, the new homeowner assumes the existing mortgage.
ASSUMPTION FEE:
A charge levied by the lender (usually against the party assuming the mortgage) for the privilege of assuming a mortgage. It can be a fixed amount or a percentage of outstanding principal on the mortgage at the time of the assumption.
ASSUMPTION OF MORTGAGE:
The agreement of a buyer to take on personal liability for a mortgage already registered on title to the property and to make payments under the mortgage. Buyer takes the place of the vendor in the contract with the lender.
ATTACHMENT:
It is the binding by a court of a piece of property or Business (real or personal) as security for a debt.
ATTESTATION:
A statement by a person who has witnessed another person signing a document to the effect that they did in fact witness the document. May includes statements to the effect that the witness knew the individual who signed personally, that the person who signed understood the contents of the document when he signed etc. Required in some states for deeds.
AUCTION:
When the seller and/or its intermediary orchestrates the selling process by encouraging purchasers to bid and rebid until the highest and best offer is received.
AUCTIONEER:
A professional (real estate broker or auctioneer, depending on local laws) who sells property at public auctions. Usually paid a percentage of the sale price.
AUDIT:
An examination of accounting documents and of supporting evidence for the purpose of reaching an informed opinion concerning their propriety.
AUTHORITY:
It is the right of an agent, conferred by his principal, to bind the principal in dealings with third parties. See actual authority, implied authority, apparent authority, ostensible authority, inherent authority.
AUTHORIZATION TO SELL:
It is a contract between a Business owner and a real estate broker or agent which allows the broker to list the Business for sale and which codifies the rights and obligations of the two parties.

In the American business community, there are different professionals interact with the buyer and seller for changing the business ownership. The American business implements some basic standards with the use of a common terminology know as business glossary or American business dictionary. Many American business words have significant meaning and exact definition set by the business industry, with abiding the business laws, will be available in a Bizworldusa as business directory or dictionary. This will help to the buyer, seller, broker, agent, tax consultants, bookkeepers, accountant, attorney, title company, escrow service, insurance broker, merchant service, banks, financial lenders, vendors, and the professionals who involved in the business industry can find the meaning to complete the sale.

If you need any further information or help, please email us at help@bizworldusa.com or contact us on 415-234-8833, one of our experienced professionals will contact you.

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