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.