Accounting, Business Studies and Economics Dictionary

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Validate-1. to attest to the correctness and reliability of a financial item. A validity review or test is required by the accountant to satisfy the legitimacy of the item. An example of validation is the examination and approval of an employee's expense request form by a supervisor. Another example is the counting of petty cash to see that it con­forms to the amount in the financial records. Or 2. to make something legal or effective. An example is signing one's name to a bill of sale, which closes the deal.

Validity test – Is an audit procedure that ascertains whether a recorded financial statements item is accurately stated.

Valuation date - This is the day when the evaluation has been made or the date when the evaluation applies.

Value -  1.the  amounts at which items are stated in financial records and statements. Value is expenditures or amounts deemed to benefit future periods. Or 2. highly subjective term, usually an expression of monetary worth applied to a particular asset, group of assets, business entity, or services rendered. It should not be confused with the term cost even though it is frequently measured, equated, and identified by it. Thus the term should be used with an appropriate modifying adjective. Or 3. represented by the amount of goods, services, or money necessary to complete an exchange for a specific commodity. In economic terms, value of goods equals price multiplied by quantity.

Value (of a business) - The amount a business is worth to a stakeholder or any other interested party.

Value added - The value of a firms output minus the value of inputs bought from other firms.

Value added tax (VAT - applies to many countries) -  A general tax applied at each point of exchange of goods or services from primary production to final consumption.  It is levied on the difference between the sale price of the goods or services to which the tax is applied, and the cost of the goods or services brought into use in production.

Value analysis - A procedure to evaluate a product after manufacture to see how costs may be reduced.

Value chainRefers to a linked set of all value creating processes or activities that convert basic input materials into products or services for the final consumer.

Value engineering - A procedure designed to reduce and avoid unnecessary costs before production begins.

Value for moneyRefers to the perception of the buyer or receiver of goods and/or services. Proof of good value for money is in believing or concluding that the goods/services received was worth the price paid.

Value in useRefers to the discounted value of net cash receipts to be obtained from the corporate asset.

Value of the marginal product - The marginal product of an input times the price of the output.

Variable - Any well defined item, such as the price of a good or its quantity, that can take on various specific values.

Variable cost - A cost that varies with output levels.

Variable costing – Is a costing method in which the costs to be inventoriedinclude only the variable manufacturing costs. Fixed factory overhead is treated as a period cost it is deducted along with the selling and administrative expenses in the period incurred.

Variable expensesRefers to those business expenses that usually fluctuate dependent upon production or sales volume.

Variable factor - An input that can be varied by any desired amount in the short run.

Variable interest rateThis  is an interest rate that moves up and down based on the changes of an underlying interest rate index, e.g. a credit card might have a variable rate that is a certain spread over the prime rate.

Variable inputs - Those inputs whose quantity used can be varied in the short run.

Variance - The average deviation of all figures from the mean, which removes plus and minus signs by 'squaring' the deviation figure. Or in accounting, is the difference between a projected number and the actual number, e.g. 1. a budget variance is spending either more or less from the amount that was budgeted; and 2. a cost variance is the difference between actual cost and standard cost in the categories of direct material, direct labour, and direct overhead.

Variance analysis - The process of calculating variances and attempting to identify their causes.  This is done by comparing the actual results with the budgeted or predicted results and investigating any discrepancies.

VAT – Value added tax.

Veblen good - Are a theoretical group of commodities for which peoples' preference for buying them increases as a direct function of their price, instead of decreasing according to the theory of supply and demand.

Velocity of circulation - National income divided by quantity of money.

Vendor Refers to a legal entity that promotes or exchanges goods or services for money.

Vendor rating - A method of measuring and evaluating the performance of suppliers.

Vent for surplus - When international trade enables a country to exploit resources that would otherwise be unused.

Venture capital This is a financing source fornew businesses or turn­around ventures that usually combine much risk with potential for high return.

Venture capitalists - Providers of funds for small or medium sized companies that may be considered too risky by other investors.

Verifiable – This means confirming or substantiating an item. The term refers to the ability of accountants to ensure that accounting information is what it purports to be.

VerifiabilityThis is where the fact is capable of being tested (verified or falsified) by experiment or observation.

Vertical equity - The idea that taxpayers with a greater ability to pay taxes should pay larger amounts.

Vertical financial analysisThis is drawing a comparison of the financial ratio's of a company in time – past, present and future.

Vertical integrationIs the combination of a parent firm and the suppliers of its raw materials or purchasers of its finished product. Vertical merger extends the lines of distribution or production, either backward toward the source or forward toward the end user.

Very long run - A period of time that is long enough for the technological possibilities available to a firm to change.

Viability Means  having the capability of developing and surviving as a relatively independent social, economic or political unit.

Visible balance - The balance of money received from exports of goods and money spent on the import of goods.

Visibles - All items of foreign trade that are tangible; goods as opposed to services.

Visible trade - The exports and imports of goods.

Voluntary export restriction (VER) - An agreement by an exporting country to limit the amount of a good exported to another country.

Volume gainThis means to obtain advantages due to increase in volume, such as value increase, points in gross margin or profit.

Voucher Refers to a formused in an internal control system to contain and verify all information about a bill to be processed or paid.


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Perpetual devotion to what a man calls his business, is only to be sustained by perpetual neglect of many other things.
Robert Louis Stevenson

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