Financial
Terminology for Drawing and
Disbursing
Officers
Debenture
The
word is derived from the Latin debeo I ower. It is an acknowledgement of
indebtness usually given by an incorporated company. It bears a specified
or fixed rate of interest which is payable whether or not the company makes
profits. Debentures are usually redeemable by the issuer.
Debit
The
left hand side of a T-account. A charge against a person or account.
Debt Capital
Money
loaned to a firm for a considerable period of time (at least twelve months).
Providers of debt capital are creditors of the firm and receive an interest in
contrast to shareholders who have ownership rights, including the right to a
division of profits.
Debtor
A
person or an enterprise that owes a debt. In most business, the debtors
arise out of credit sales made. They are current assets of a firm and
form an integral part of the working capital of a business.
Deed
A
legal document which has been signed, sealed and delivered. A written
document under seal which is an evidence of a legal transaction.
Deficit
A
shortfall of revenue as compared to expenditure.
Deficit Financing
Deliberate
budgeting for a deficit.
Depreciation
The
financial provision for the diminution in asset value out of profits of a
firm. The loss of value of an asset due to time, normal use, or
obsolescence. A fall in the purchasing power of money i.e. its exchange
value in relation to goods and services. The allocation of the original
cost of plant, property and equipment to the particular periods or products
that benefit from the utilization of assets.
Direct Costs
Costs
which can be reasonable attributed exclusively to the production of particular
goods or services, e.g. cost incurred by a department for the sole benefit of
the department.
Direct Labour
The
labour of those people who work directly on materials converted into finished
products; in other words, with units of product designated as the cost object;
labour that can be easily associated with units of product.
Direct Material
All
raw materials which are an integral part of the finished goods and which can be
conveniently assigned to specific physical units.
Direct profit
Sales
revenue from a product less the direct costs attributable to that product.
Dirty money
An
extra payment made to workers for handling goods of an objectionable nature.
Disclaimer
A
statement clause in a deed, contract etc. renouncing, claims, responsibility,
duties or powers. The term is applied to matters where a renunciation or
repudiation is desired.
Disclosure
The
practice of revealing information especially financial about a firm or
company’s activities. A certain amount of necessary disclosure of data or
information about a company is required under the companies Act. 1956.
Discount
A
deduction from the catalogue price of an article, in cash or kind. An
incentive or inducement offered by a creditor to debtors to pay promptly.
To acquire a bill of exchange less than its face value, the amount of this
discount depending on the length of the unexpired term. When shares and
stocks are issued below the issue price, they are said to be issued at a
discount.
Dishonour
When
applied to a bill of exchange or cheque, it implies a failure to meet the
financial commitment as promised or accepted.
Distribution Costs
Costs
related with transferring goods from a supplier to the customer. They
include packing and transportation costs.
Diversification
Expansion
of the range of products and services produced by a firm into other related or
unrelated industries or markets,.
Dividend
The
amount of distributed profit as a percentage of the nominal value of the share
capital to which it relates. A periodical division and distirubtion of
profits amongst share-holders. Dividends are usually declared annually, but
many companies pay something on account of interim dividend
Double Entry Accounting
An
accounting system in which each transaction is recorded and effects two or more
accounts with equal debits and credits.
Duality
The
concept of double entry. That every transaction has a dual value aspect
i.e. a flow of value from source to a destination.
Duties
Taxes
on merchandise or goods entering a country known as customs. A payment
which is evidenced by affixing a stamp known as stamp duty. All imports levied
by a Government.
Earned Income
Income
derived from work as distinct from income from investments. Income
from salaries, wages, profits, pensions, social-security benefits, annuities
etc. which is taxable for income tax purposes.
Embezzle
Dishonestly
using someone else’s money; the person whose money is taken may be an employer.
Exbezzlement is the appropriation to his own use by an employee of money
rightfully belonging to his employer.
Emoluments
The
remuneration or salary and other material benefits received for holding a
certain position in a firm, company or organization.
Endorsement
A
signature, generally on the reverse side of the document given to transfer the
rights to which the document given to transfer the rights to which the document
gives rise to some other party or person. Endorsement may or may not be
compulsory.
Equity
A
right, claim or interest in property. The net worth of a business,
consisting of capital stock, capital (or paid-in) surplus, earned
surplus, (or retained earnings), and sometimes, certain net worth
reserves. Common equity is the part of the total net worth belonging to
the common stock holders. Total equity would include preferred stock
holders. The terms net worth and common equity are often used
together. Ordinary shares or stock. The risk capital of a business.
Equity share capital
The
company’s issued share capital excluding any part which carries any right to
participate beyond a specified amount in a distribution.
Expenditure
A
cash disbursement. Expenditure of revenue nature is one which is incurred
for current or short-term activities and is debited to the profit and loss
account. Capital expenditure is usually heavy in nature and incurred on
purchasing assets which are likely to give long term benefits.
Expenses
Expired
costs that are deducted from revenue for a given period. These are recurring
charges and payments made in cash.
*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.
*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.
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