Accounting, Business Studies and Economics Dictionary
Safe harbour rule – A legal concept whereby a person who has meet the required listed rules and requirements is protected from any adverse legal proceedings. Frequently, safe harbours tend to be applied where any legal restrictions and/or requirement are ambiguous and therefore carry a risk of being punished for a violation which was unintended.
Salary - The scheduled remuneration an employer pays to an employee. It is normally paid on a monthly or year basis as different from wages which are paid on a hourly basis.
Sale and repurchase agreement (repos) - An agreement between two financial institutions whereby one in effect borrows from another by selling it assets, agreeing to buy them back (repurchase them) at a fixed price and on a fixed date.
Sales allowance - The reduction in the selling price of goods because of a particular problem (e.g., breakage, quality deficiency, incorrect quantity).
Sales ledger - A subsidiary ledger which holds the accounts of a business's customers. A control account is held in the general ledger (usually called a debtors' control account) which shows the total balance of all the accounts in the sales ledger.
Sales / receivables (Receivables Turnover) - The ratio that is a measure of the number of times accounts receivables (debtors) turn over during any given year. The higher the ratio of receivables turnover, the shorter the period of time between sale and the collection of cash. It is indication of the speed that a firm is getting paid for its sales.
Sales mix – Refers to relative proportions of the product sold i.e. the combination and percentage of each different item sold as a percentage of the whole.
Sales order (contract) - The contract by which buyer and seller agree to the terms and conditions of a sale.
Sales return (return inwards) - The merchandise given back to the seller because of defects.
Sales revenue - The income during a period of time from the sale of goods and services.
Salvage (scrap) value – 1. the scrap value or the amount of money a dealer of junk will pay. Or 2. the amount the asset is expected to sell for after all the depreciation has been removed/deducted from the historical cost of a fixed asset. Or 3. the realisable value of a fixed asset after deducting costs associated with its sale.
Sample - A group of consumers selected from the population.
Sampling – Refers to the process of selecting items from a population to reach a conclusion about the population.
S&P 500 - Standard and Poors (S&P) 500.
Satisficing - A hypothesised objective of firms to achieve levels of performance deemed satisfactory rather than to maximise some objective. 2) To decide on and pursue a course of action that will satisfy the minimum requirements necessary to achieve a particular goal.
Scan – Is to read through a document rather hastily.
Scarcity - The state in which wants exceed the amount that available resources can produce. Scarcity is the excess of human wants over what can actually be produced. "Because of scarcity, various choices have to be made between alternatives.
Scatter graph - A graph showing the performance of or variable against another independent variable on a variety of occasions. It is used to show whether a correlation exists between the variables.
Schedule - 1. to prioritise, arrange, or position with respect to a finite time period. Or 2. supporting set of calculations, data, information, or analysis that shows or amplifies how figures in primary statements are derived. An example is a schedule for an aging of accounts. Or 3. assignment of work to a facility and the specification of the sequence and timing of the work. Or 4. auditor's set of working papers for an audit.
Scientific management - A theory that suggests that there is a 'best' way to perform work tasks.
Scrap – Refers to the sales value of scrap. Scrap is residue from manufacturing operations that has relatively minor recovery value.
Scrap value – Salvage value.
Screening - An action taken by an uninformed party to induce an informed party to reveal information.
Search theory - This examines people's behaviour under conditions of ignorance where it takes time to search for information.
Search unemployment - Unemployment caused by people continuing to search for a good job rather than accepting the first job that they come across after they become unemployed (also called frictional (search) unemployment).
Seasonality – Refers to seasonal variation in business or economic activity that takes place on a recurring basis. Seasonality may be caused by various factors, such as weather, vacation, and holidays.
SEC - Securities and Exchange Commission.
Secondary data - Data which is already in existence. It is normally used for a purpose other than that for which it was collected.
Secondary labour market - The market for peripheral workers, usually employed on a temporary or part-time basis, or a less secure 'permanent' basis.
Secondary research - The use of information that has already been collected and is available for use by others. Also called desk research.
Secondary school enrolment rate - The number of children of secondary school age, usually 12 to 17 years, who are enrolled at school as a percentage of the age group.
Security - 1. collateral in support of debt. An example is real estate that serves as security for a bank loan. Or 2. financial instrument that shows ownership, such as an equity item (e.g., stock), debt instrument (e.g., bond, note), or right (e.g., option).
Seed money – Usually refers to funds put up by venture capitalists to finance a newbusiness.
Segment - A functional or responsibility area within a business that can be reported upon separately.
Segmented reporting - The process of reporting activities of various segments of an organisation such as divisions, product lines, or sales territories.
Self-actualisation - A level on Maslow's hierarchy where an employee realises his or her full potential.
Self-fulfilling speculation - The actions of speculators tend to cause the very effect that they had anticipated.
Self-sufficiency - A state that occurs when each individual consumes only what he or she produces.
Selling, general & administrative expense (SG & A) - The expenses involved in running a business..
Selling short – Refers to the selling of securities (or commodities futures contracts) not owned by the seller. The investor (seller) earns a profit when the market price of the security declines, and loses money when the purchase price is higher than the original selling price.
Semi-variable cost - A cost which consists of both fixed and variable elements. It does vary with volume changes, but, different to a variable cost, it does not vary in any direct or proportional way. This cost contains both variable and fixed elements, e.g., a rented car may have a fixed fee for rent rental, but contains a variable fee for kilometres travelled.
Service - This is normally used to describe the sale of an activity that someone does for you rather than the sale of a good i.e. a haircut.
Service contract – Refers to a contract offered by a firm for the maintenance and/or repair of a particular a product after its manufacturer's warranty expires.
Services - Things purchased by consumers that do not have physical characteristics. Examples of services are those obtained from doctors, teachers, actresses and shop assistants.
Setup costs – Refers to expenses incurred each time a batch is produced. It consists of engineering cost of setting up the production runs or machines, paperwork cost of processing the work order, and ordering cost to provide raw materials for the batch.
Severance pay - An amount payable to an employee on termination of contract.
Short run - A period of time in which the quantities of some inputs are fixed while others can be varied.
Short-run equilibrium - Generally, equilibrium subject to fixed factors or other things that cannot change over the time period being considered. For a competitive firm, the output at which market price equals marginal cost; for a competitive industry, the price and output at which industry demand equals short-run industry supply and all firms are in short-run equilibrium. Either profits or losses are possible.
Short-run shut-down point - This is where the AR curve is tangential to the AVC curve. The firmcan only just cover its variable costs. Any fall in revenue below this level will cause a profit maximising firm to shut down immediately.
Short-run supply curve - A curve showing the relationship between quantity supplied and market price, with one or more fixed factors; it is the horizontal sum of marginal cost curves (above the level of average variable costs) of all firms in a perfectly competitive industry.
Sight deposits - Deposits that can be withdrawn on demand without penalty.
Sight draft – Refers to a draft which is payable on demand.
Signalling - An action taken by an informed party to reveal private information to an uninformed party.
Significance – Is often used to mean something that is not expressly stated but can be inferred, e.g. the significance of an increase in product demand can only be known after the financial effects are calculated.
Significant - Is important, essential, distinctive, or of sufficient nature to warrant special notice relative to a standard or norm.
Simulation - A technique which imitates what might happen in reality by using random numbers.
Sign off – Refers to the approval or agreement by an authorised person e.g. to sign-off on a purchase contract.
Sinking fund - Refers to an account that was set up in order to reduce another account over time to zero (using the principles of straight-line depreciation or amortisation). When the fund reaches the value of the account, both are removed from the business's balance sheet.
Sit-in/Work-in - The illegal occupation of premises by workers, which allows workers to gain control of the factory.
Skimming pricing – Is a pricing strategy used when a new product is introduced. It involves setting a high initial price primarily to recoup research and development investments; the price is progressively lowered as time passes and competition sets in.
Smart targets – Targets that are specific, measurable, achievable, realistic and time based.
SME - Small and Medium Enterprises (ie. small and medium size businesses). The is no clear distinctions between what is a small or medium sized business.
Smoothing – Method used in forecasting trends, seasonality and level change, e.g. averaging month-to-month fluctuations. Works well with data that has a lot of randomness.
Social audit - A process for evaluating, reporting on, and improving an organisation's performance and behavior, and for measuring its effects on society. The social audit can be used to produce a measure of the social responsibility of an organisation. It takes into account any internal code of conduct as well as the views of all stakeholders and draws on best practice factors of total quality management and human resource development. Like internal auditing, social auditing requires an organisation to identify what it is seeking to achieve, who the stakeholders are, and how it wants to measure performance.
Social auditing - The process by which a business evaluates the effect of its activities on all of its stakeholders.
Social capital/cohesion – Refers to networks, together with shared norms, values and understandings which facilitate cooperation within or among those groups for mutual benefit.
Social efficiency - Production and consumption at the point where marginal social benefit equals marginal social cost (MSB = MSC). An equitable and desirable outcome for society. Markets generally fail to achieve social efficiency. There are various types of market failure. Market failures provide one of the major justifications for government intervention in the economy.
Social impact statement – Is used to evaluative and detailed report to assess the effect and consequences of the public-interest, non-profit activities of an entity.
Social regulation - The regulation of economic behavior to advance social goals when competition and economic regulation will fail to achieve those goals.
Social responsibility - The responsibility that a business has towards those directly or indirectly affected by its activities.
Soft landing - This term is used to describe the economy slowing enough to eliminate the need for the government to further raise interest rates to dampen activity but not enough to threaten a recession, which is what results when the economy contracts instead of expands. Hard landing, on the hand, could mean a recession.
Soft loan - A loan with an element of concession or aid in it i.e. the conditions are more favourable than market conditions.
Sole trader - A business organisation which has a single owner.
Sound - When used in a financial context, means financially secure and safe.
Span of control - The number of subordinates working directly under a manager.
Special deposits - A. system used up to 1980. Deposits that the banks could be required to make in the Bank of England. They remained frozen there until the Bank of England chose to release them.
Special drawing rights (SDRs) - Financial liabilities of the International Monetary Fund (IMF), held in a special account generated by contributions of member countries. Members can use SDRs to maintain supplies of convertible currencies when these are needed to support foreign exchange trades.
Special journals – Refers to a journal which records of original entry other than the general journal that are designed for recording specific types of transactions of similar nature, e.g. sales journal, Purchase Journal, cash receipts journal, cash payments/disbursements journal, and Payroll Journal.
Special purpose vehicle/entity (SPV /SPE) – Refers to a type of corporate entity or limited partnership created for a specific transaction or business, especially one unrelated to a company's main business.
Specific research – Refers to a method used when gathering primary information for a market survey where targeted customers / consumers are asked very specific and in-depth questions geared toward resolving problems found through prior exploratory research.
Speculation - Where people make buying or selling decisions based on their anticipations of future prices.
Spot price - The current market price.
Spreadsheet - A method of storing data in cells in such a way that a change in one of the entries will automatically change any appropriate totals.
Staff authority – Refers to the power to give advice, support, and service to line departments. Staff managers do not command others. Examples of staff authority are found in personnel, purchasing, engineering, and finance.
Stakeholder objectives - The goals of people with interests in the business. What stakeholders want to achieve.
Stakeholders (in a company) - People who. are affected by a company's activities and/or performance (customers, employees,. owners, creditors, people living in the neighbourhood, etc.). They may or may not be in a position to take decisions, or influence decision taking, in the firm.
Stale cheque – Is when a cheque is six months or older than the date affixed to the cheque by the maker. If a customer’s check is presented more than six months after the date appearing on the cheque, the paying bank has the option of paying or dishonoring the cheque because the cheque is deemed "stale".
Standard cost - The usual cost of a specific activity. It is a production or operating cost that is carefully predetermined. A standard cost is a target cost that should be attained. The standard cost is compared with the actual cost in order to measure the performance of a given costing department or operation.
Standard cost system – A process in cost accounting by which production activities are recorded at standard costs and variances from actual costs are isolated. Standard costs are carefully predetermined target costs that should be attained under efficient operating conditions.
Standardisation - The use of uniform resources and activities.
Standardised unemployment rate - The measure of the unemployment rate used by the ILO and OECD. The unemployed are defined as persons of working age who are without work, available to start work within two weeks and either have actively looked for work in the last four weeks or are waiting to take up an appointment.
Stated capital - 1. the amount of capital contributed by stockholders of a corporation. It may also refer to the method of valuating no-par-value stock where the portion of the amount contributed is credited to the capital stock account and the balance is credited to paid in capital. Or 2. the legal capital of a company.
Statement - 1. the summary statement documenting terms, conditions, or status of an account. An example is a statement of retail credit account status. Or 2. the formal document presenting the financial condition and operating performance of an enterprise. These include the income statement, balance sheet, and statement of changes in financial position. Also included may be documents for internal use such as performance appraisals, budgets, and so on. Or 3. verbal utterance or proposition.
Statement of accounting policies - Refers to a combination of the definition of the reporting organisation, statement of general accounting policies, statement of particular accounting policies, and a statement of changes in accounting policies.
Statement of cash flow – Is a report that measures the flow of money in and out of a business, as they apply to operating, investing, and financing activities.
States of nature – Refers to those conditions that are likely to occur and over which the decision maker has no control.
Statistical process control - The collection of data about the performance of a particular process in a business.
Statistical sampling – Is the method based on the assumption that, within a given confidence level and allowance for sampling risk, a randomly selected sample of items from a population will reflect the same characteristics that occur in the population.
Statistics – The field of study concerning information calculated from sample data.
Statuary law – Refers to law enacted by the legislative branch of government, as distinguished.
Step costs – Refer to those costs that are approximately fixed over a small volume range, but are variable over a large volume range. For example, supervision costs are fixed for a given range of production volume, but increased production often requires additional work shifts leading to added supervisory costs in a lump sum fashion.
Stock option – Is when the right is given the holder to buy a specified number of shares of stock at a certain price by a particular date. Stock option plans are often used to compensate corporate officers and other employees for specific services.
Stock taking - Physically checking a business's stock for total quantities and value.
Stock turns – A ratio that is used to show the number of times per year that the inventory ( raw materials, work in progress & finished goods) is turned over in relation to the sales revenue of a given product. Calculation - Stock turns = Sales turnover of products / Value of raw material, work in progress & finished goods.
Stop loss order – Is the direction given to a broker to buy or sell a stock when it rises to or drops below a certain price.
Storage - 1. the process of storing information in a computer memory or on a magnetic tape or disk. Or 2. an electronic memory device. Or 3. a depository for goods, e.g. a stockroom or warehouse;
Stores - 1. the control account for all purchases of materials and supplies. All purchases of materials, parts, and supplies are charged to Stores as purchased because the storekeeper is accountable for them. The Stores Control account is supported by an underlying subsidiary ledger, called store cards. Or 2. the raw materials, supplies, and parts. 3. retail outlets.
Straight-line depreciation - Depreciating something by the same (ie. fixed) amount every year rather than as a percentage of its previous value. Example: a vehicle initially costs $10,000. If you depreciate it at a rate of $2000 a year, it will depreciate to zero in exactly 5 years. See Depreciation.
Strategic assets – Are any asset or group of assets that the entity needs to retain if the entity is to maintain the entity's capacity to achieve or promote any outcome that the entity determines to be important to the current or future well-being of the entity.
Strategic behaviour – Behaviour based on strategy. People often think and behave strategically. How you think others will respond to your actions is likely to influence your own behaviour. Firms, for example, when considering a price or product change will often take intQ account the likely reactions of their rivals
Strategic decisions - Decisions concerning policy that have a long term impact on a business. Can be risky.
Strategic planning – Is the planning process defining what you want to accomplish in your business and then identifying the path that will allow you to reach your goal in the most efficient and sensible manner.
Strategy – The pattern of decisions and actions that are taken by a business to achieve its goals and objectives.
Stratified sampling – Is a sampling method where the population is divided into homogenous sub groups. Each sub-group is sampled individually.
Strike - A form of industrial action where employees refuse to work.
Structure of a business - The way in which a business is organised.
Subordinated debt - If a company is liquidated (i.e. becomes insolvent ), the secured creditors are paid first. If any money is left, the unsecured creditors are then paid. The amount of money owed to the unsecured creditors is termed the 'subordinated debt' of the company.
Substantive – Refers to something which is real rather than apparent, as seen by an unbiased observer and not just the official view of management.
Sublet – Is used in real estate, refers to the leasing of space within a leased facility by the original lessee.
Subsidiary ledgers - Ledgers opened in addition to a business's general ledger. They are used to keep sections of a business separate from each other (e.g.. a Sales ledger for the customers, and a purchase ledger for the suppliers). (See Contra accounts ) .
Subsidy - A payment made by the government to producers of goods and services.
Substitutes - Any good that can stand in for another good to satisfy similar needs or desires. The degree of substitutability is measured by the magnitude of the positive cross elasticity between the two.
Substitution effect - The tendency of people to substitute in favour of cheaper commodities and away from more expensive commodities:
Substitution effect of a rise in wage rates - Workers will tend to substitute income for leisure as leisure now has a higher opportunity cost. This effect leads to more hours being worked as wage rates rise.
Superannuation – Is a monthly payment made to someone who is retired from work.
Supernormal profit (also known as pure profit, economic profit, abnormal profit, or simply profit) - The excess of total profit above normal profit.
Supporting documents – These documents assist in making a case (prove a point or forward an argument) by providing additional depth and analysis for much of the case in question.
Suppressed inflation – Refers to a situation exists in which prices would rise if government regulations did not establish artificial limits on prices, wages, etc.
Supply curve - The graphical representation of the relationship between the quantity of some product that producers wish to make and sell per period of time and the price of that product, other things being equal.
Supply of labour - The total number of hours of work that the population is willing to supply.
Supply schedule - A table showing for selected values the relationship between the quantity of some product that producers wish to make and sell per period of time and the price of that product, other things being equal.
Supply side measure - A government policy designed to increase output.
Supply-side policy - Government policy that attempts to alter the level of aggregate supply directly (rather than through changes in aggregate demand).ie policies aimed at increasing either the amount and/or productivity of resources in an economy.
Surcharge – Refers to a charge added on top of another charge for a specific service, product or purpose.
Surplus - 1. Capital surplus, the stockholders' equity in a corporation in excess of par or stated value of capital stock. Or 2. earned surplus or retained earnings/profit reflecting the accumulated net income less dividend distributions. Or 3. sometime used as a short form of government budget surplus.
Surveillance - This is to close watch kept over someone or something.
Suspense account- A temporary account used to force a trial balance to balance if there is only a small discrepancy (or if an account's balance is simply wrong, and you don't know why). A typical example would be a small error in petty cash. In this case a transfer would be made to a suspense account to balance the cash account. Once the person knows what happened to the money, a transfer entry will be made in the journal to credit or debit the suspense account back to zero and debit or credit the correct account.
Sustainable development - Is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Sustainability (environmental) - The ability of the environment to survive its use for economic activity.
SWOT Analysis - An analysis of internal strengths and weaknesses and the external threats and opportunities facing a business. IT is one of the most used forms of business analysis.
1. Strengths: Strengths are those factors that make an organization more competitive than its marketplace peers. Strengths are what the company has a distinctive advantage at doing or what resources it has that is strategic to the competition. Strengths are, in effect, resources, capabilities and core competencies that the organisation holds that can be used effectively to achieve its performance objectives.
2. Weaknesses: A weakness is a limitation, fault, or defect within the organisation that will keep it from achieving its objectives; it is what an organization does poorly or where it has inferior capabilities or resources as compared to the competition.
3. Opportunities: Opportunities include any favourable current prospective situation in the organization's environment, such as a trend, market, change or overlooked need that supports the demand for a product or service and permits the organisation to enhance its competitive position.
4. Threats: A threat includes any unfavourable situation, trend or impending change in an organisation's environment that is currently or potentially damaging or threatening to its ability to compete. It may be a barrier, constraint, or anything that might inflict problems, damages, harm or injury to the organisation.
Swift code - Within the context of international payment transactions, is a code issued by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) that enables banks worldwide to be identified without the need to specify an address or bank number. SWIFT codes are used mainly for automatic payment transactions.
Synergy – Refers to when the working together of two or more things to produce an effect greater than the sum of their individual effects. For example, in the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join.
System - Parts that work together to achieve an objective; a system can be a communications system, a business, an economic or a political system.
Systematic sampling – A sampling method that develops a system of selecting criteria and then uses this system to conduct its sample. i.e. every 10th person that enters the door.
Some regard private enterprise as if it were a predatory tiger to be shot. Others look upon it as a cow that they can milk. Only a handful see it for what it really is - the strong horse that pulls the whole cart.
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