Business Term Definitions

A-C

D-L

M-Z

MADISON AVENUE – New York City thoroughfare that has historically been the location of many large ad agencies. Today the term often refers to the American advertising industry collectively.

MAGALOG – A mail-order catalog that carries editorial matter and advertisements for multiple companies.

MAIL ORDER – Retail sales conducted by mail.

MAILER – A mailed advertisement.

MAILING LIST – A list of prospective customers organized by defined factors such as location, income, or other consumer profile aspect.

MAINFRAME COMPUTER: A high-end computer processor, with related peripheral devices, capable of supporting large volumes of batch processing, high performance on-line transaction processing systems, and extensive data storage and retrieval. SIMILAR TERMS: Host Computer.

maintenance shop  a workplace in which an employee who joins the union must remain a union member as long as he or she is employed by the firm

major equipment  large tools and machines used for production purposes

MAKER - The one who subscribes to and thereby makes himself liable for a legal obligation-such as the maker of a promissory note.

MANAGEMENT - Those policy makers, planners, and administrators responsible for running a business.

management by objectives (MBO)  a motivation technique in which managers and subordinates collaborate in setting goals

management controls are controls performed by one or more managers.

management development  the process of preparing managers and other professionals to assume increased responsibility in both present and future positions

management information system (MIS)  a system that provides managers with the information they need to perform their jobs as effectively as possible

management representation letter A letter addressed to the auditor, signed by the client's chief executive office and chief financial officer. During an audit, management makes many representations to the auditor. Written representations from management in the letter confirm oral representations given to the auditor, document the continuing appropriateness of such representations, and reduce the possibility of misunderstanding.

Management the role of conducting and supervising a business.

management  the process of coordinating people and other resources to achieve the goals of the organization

Manager An LLC may be operated by a group of managers who act much like a board of directors. If an LLC is to controlled by mangers this fact must be stated in the articles of organization.

managerial hierarchy  the arrangement that provides increasing authority at higher levels of management

manual controls are controls performed manually, not by computer.

MANUAL TAG SYSTEM is a inventory tracking system used in inventory management that tracks inventory using tags removed at the point of purchase.

manufacturer (or producer) brand  a brand that is owned by a manufacturer

Manufacturer. Business that produces goods for individuals and/or businesses.

manufacturer’s sales branch  essentially a merchant wholesaler that is owned by a manufacturer

manufacturer’s sales office  essentially a sales agent that is owned by a manufacturer

Manufacturer's Output Policy. An insurance policy that covers the loss of property owned by a manufacturer but located off the premises.

Manufacturer's Representative. Middleman agent who markets related, but non-competing products for several manufacturers or vendors.

MANUFACTURING ACCOUNT is an accounting statement that is an integral part of the final accounts of a manufacturing organization. For any particular period, it indicates, among other things, prime cost of manufacturing, manufacturing overhead, the total manufacturing cost, and the manufacturing costs of finished goods.

MANUFACTURING STATEMENT see MANUFACTURING ACCOUNT.

margin — The amount a customer deposits in a special account kept by a stockbroker. The customer uses the money in this margin account, combined with money borrowed from the broker, to purchase stock (called buying on margin).

MARGIN (Stocks) allows investors to buy securities/assets by borrowing money from a broker/banker. The margin is the difference between the market value of a stock/asset and the loan a broker/banker makes.

MARGIN ACCOUNT - An account wherein one can buy securities by initially paying only a portion of their purchase price and the balance at a later date.

MARGIN ACCOUNT (Stocks) is a leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

MARGIN CALL (Stocks) is a demand for additional funds because of adverse price movement is a stock.

margin requirement  the portion of the price of a stock that cannot be borrowed

Margin the difference between the selling price and the purchase price of an item usually expressed as a percentage of the selling price. Compare mark-up.

MARGINAL COST Additional cost associated with producing one more unit of output.

MARGINAL COST is a calculation showing the change in total cost as a result of a change in volume, e.g. if one more item of output increases the total cost by $25, the marginal cost is $25. It is usually useful to determine marginal cost because it can aid in determining if the rate of production should be altered.

MARINE INSURANCE is insurance coverage protecting against loss or damage of goods transported by sea.

Marine insurance:  Insurance that compensaes the owner of goods transported at sea in the event of loss that cannot be legally recovered from the carrier.

market — The group of people who can and want to buy a product now or later. As in, is there a market for this $3,000 bicycle?

MARKET - The number of people and their spending for your product line within your geographic boundaries.

MARKET – The prospective customers for a given product or service.

Market A place where products and services and their competitive substitutes are brought and sold, an opportunity to sell, or the demand for goods and services.

Market Access:  The extent to which a domestic industry can penetrate a related market in a foreign country.  Access can be limited by tariffs or other non trade barriers.

market allocation  an agreement to divide a market among potential competitors

MARKET CAPITALIZATION is the total dollar value of all outstanding shares. It is calculated by multiplying the number of shares times the current market price. The term is commonly referred to as “market cap”.

market economy  an economic system in which individuals and businesses decide what to produce and buy, and the market determines prices and quantities sold

Market Life Cycle - the period of time that a substantial segment of the buying public is interested in purchasing a given product or service form.

market order  a request that a stock be purchased or sold at the current market price

Market Penetration Pricing Strategy - if near term income is not critical and rapid market penetration for eventual market control is desired, then you set your prices very low.

Market Potential. The maximum achievable combined sales volume for all sellers of a specific product during a specific time period, in a specific market.

market price  the price at which the quantity demanded is exactly equal to the quantity supplied

MARKET PROFILE – The characteristics of a group or area targeted for a campaign.

MARKET RESEARCH – A study of consumer groups and business competition used to define a projected market.

market segment  a group of individuals or organizations within a market that share one or more common characteristics

market segmentation the division of a market into segments. Each segment consists of a group of consumers with similar requirements, which can be distinguished from the requirements of other consumers in the market. There will be distinct differences between the goods and services needed to meet the requirements of each segment.

market segmentation  the process of dividing a market into segments and directing a marketing mix at a particular segment or segments rather than at the total market

Market Segmentation. The process of dividing a heterogeneous market into several homogeneous sub-markets.

market share — A company’s or product’s portion of the total market for that good.

Market Share - the percentage of the total sales (from all sources) of a service or product represented by the sales made by your enterprise. i.e. your sales divided by total sales

market value  the price of one share of a stock at a particular time

MARKET VALUE, in general, is the price at which buyers and sellers trade similar items in an open marketplace. In the absence of a market price, it is the estimated highest price a buyer would be warranted in paying and a seller justified in accepting, provided both parties were fully informed and acted intelligently and voluntarily. See also OPEN MARKET VALUE (OMV).

market  a group of individuals or organizations, or both, that need products in a given category and have the ability, willingness, and authority to purchase such products

Market. A specific group of people who have needs to satisfy and the ability to pay (purchasing power).

marketable securities — Securities, like government bonds, that can be sold easily. On balance sheets, they are listed as current assets because they’re expected to be converted to cash in the near future, usually one year.

Market-basis balance sheet A balance sheet in which assets are valued at their respective market prices assuming a reasonable time period for their sale.

MARKETING – The techniques used to attract and persuade consumers. As a direct response agency, MJM keeps marketing goals uppermost in mind in the design of every advertisement.

marketing channel (or channel of distribution)  a sequence of marketing organizations that directs a product from the producer to the ultimate user

marketing concept  the business philosophy that involves the entire organization in the process of satisfying customers’ needs while achieving the organization’s goals

Marketing finding out what customers want, then setting out to meet their needs, provided it can be done at a profit. Marketing includes market research, deciding on products and prices, advertising promoting distributing and selling.

Marketing Group of related business activities aimed at satisfying the demand for goods and services.

marketing information system  a system for managing marketing information that is gathered continually from internal and external sources

marketing intermediary (or middleman)  a marketing organization that links a producer and user within a marketing channel

marketing manager  a manager who is responsible for facilitating the exchange of products between the organization and its customers or clients

marketing mix  a combination of product, price, distribution, and promotion developed to satisfy a particular target market

Marketing Mix. The four sets of tools the entrepreneur may combine to shape market demand and facilitate transactions: Product, Price, Promotion, Distribution.

marketing plan details of specific tasks worked out by and for a business concerning how market research, product choice and pricing, advertising, promotion and distribution will be done.

marketing plan  a written document that specifies an organization’s resources, objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group

marketing research  the process of systematically gathering, recording, and analyzing data concerning a particular marketing problem

Marketing Research. The process of systematically gathering, analyzing and interpreting data pertaining to the company's market, customers and competitors, with the goal of improving marketing decisions.

marketing strategy a business’ approach to marketing its products/ services expresses in broad terms, which forms the basis for developing a marketing plan.

marketing strategy  a plan that will enable an organization to make the best use of its resources and advantages to meet its objectives

marketing  the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

Market-Value Clause. A clause in an insurance policy that allows for the settlement of a claim based on the market value rather than the actual cash value.

Markup - Markup is the difference between invoice cost and selling price. It may be expressed either as a percentage of the selling price or the cost price and is supposed to cover all the costs of doing business plus a profit. Whether markup is based on the selli

MARKUP is the amount added to the cost of goods in order to produce the desired profit.

mark-up the price increase between buying at wholesale and selling at retail often expressed as a percentage of the wholesale or cost price. Compare margin.

markup  the amount a seller adds to the cost of a product to determine its basic selling price

MARQUEE – An onsite billboard, often advertising a theater performance.

Maslow’s hierarchy of needs  a sequence of human needs in order of their importance

MASSACHUSETTS TRUST - An unincorporated organization created for profit under a written instrument or declaration of trust, by the terms of which the property held in trust is managed by compensated trustees for the benefit of persons whose legal interests are represented by transferable certificates of participation or shares; also called business trust.

Master Lease: A contract where the lessee leases currently needed assets and is able to acquire other assets under the same basic terms and conditions without negotiating a new contract.

master limited partnership (MLP)  a business partnership that is owned and managed like a corporation but taxed like a partnership

MATCHING CONCEPT is the accounting principle that requires the recognition of all costs that are directly associated with the realization of the revenue reported within the income statement.

material (materiality) Information important enough to change an investor's decision. Insignificant information has no effect on decisions, so there is no need to report it. Materiality includes the absolute value and relationship of an amount to other information.

Material Goods - normally raw or processed materials such as coal or steel that will become part of the purchaser's end product.

Material Participation. Regular, substantial, and continuous involvement in a business on the part of either the taxpayer and/or spouse. Allows losses from trades or businesses to be deducted without limitation under the passive loss rules. Applies to S corporations and partnerships.

material weakness A condition in which internal controls do not reduce to a relatively low level the risk that material errors or fraud may occur and not be detected in a timely period by employees in the normal course of their duties.

MATERIALITY is the importance of information or an event that influences a company's price of stock.

MATERIALS are physical goods (and their cost) used in the manufacture of a product, often separated into DIRECT MATERIAL (that which goes directly into the product such as cream into ice cream, or steel into cars) and INDIRECT MATERIAL (that which is used in maintaining the manufacturing environment such as cleaning fluids or oil for lubrication of manufacturing equipment). Indirect materials are usually part of the overhead component of cost. The term material, when used without the direct or indirect qualifier, usually refers to direct materials.

materials handling  the actual physical handling of goods, in warehousing as well as during transportation

materials requirements planning (MRP)  a computerized system that integrates production planning and inventory control

MATRIX ORGANIZATION is where a company superimposes a group or interdisciplinary team of project specialists on a functional organizational design. In a matrix organization the members have dual allegiances, i.e., to that particular assignment or project as well as their normal organizational department.

matrix structure  an organizational structure that combines vertical and horizontal lines of authority usually by superimposing product departmentalization on a functionally departmentalized organization

Maturity - As applied to securities and commercial paper, the period end date when payment of principal is due.

maturity date  the date on which the corporation is to repay the borrowed money

Maturity Date. The date on which a loan, mortgage, bond, etc. is due and any outstanding principal must be paid.

Maturity date: Date at which payment is due under a term bill of exchange.

Maturity Extensions - Extensions of payment beyond the original period established for repayment of a loan.

MD&A is an acronym for Management Discussion and Analysis. MD&A usually refers to that section of a corporate annual or quarterly report that provides managerial comment on corporate performance for the time period in question.

measure of value  a single standard or "yardstick" used to assign values to, and compare the values of, products, services, and resources

Mechanic's Lien. A claim in favor of mechanics, contractors, laborers or material suppliers against a building or other structure. The lien can only be filed by persons who worked on the building or supplied materials.

MEDIA - Forms of mass communication. Newspapers, magazines, direct mail, billboards, bus signs, radio, television and internet are some important media that carry advertising.

MEDIA PACK - A folder of information issued by a particular publication concerning the publication and the process of placing ads in the publication. Regular elements of the standard media pack include contract rates, column sizes, deadlines, editorial calendars, special features, media circulation, geographic coverage, audience demographics, etc.

MEDIA PLAN, in advertising, is the plan that details the usage of media in an advertising campaign including costs, running dates, markets, reach, frequency, rationales, and strategies.

MEDIA PLANNER – An employee of an advertiser or agency who coordinates media aspects of a campaign and selects the most effective media to use. Important factors in media planning include: the campaign; the budget, size and character of the market profile; and the positioning opportunities in the media.

MEDIA RESEARCH – A study of radio, television and print media for the purpose of reaching the optimal consumer audience.

MEDIA TRANSPORTATION COVERAGE: An insurance policy designed to cover transportation of items to and from an EDP center, the cost of reconstruction and the tracing of lost items. Coverage is usually extended to transportation and dishonesty or collusion by delivery employees.

median  the value at the exact middle of a set of data when the data are arranged in order

mediation — Using a neutral third party to settle a dispute by fostering compromise among battling groups. Can be used in labor-management disputes.

mediation  the use of a neutral third party to assist management and the union during their negotiations

Medical Spending Accounts (MSAs). An investment fund similar to an IRA that can be used to pay more routine medical expenses, when used in conjunction with "high-deductible" health insurance, which pays the big bills. Only 750,000 of these MSAs are available nationwide under a pilot program that runs through the year 2000. To qualify, you have to be self-employed or employed by a small employer that offers the program.

medium of exchange  anything accepted as payment for products, services, and resources

Member A member is a person or entity who is an owner of some or all of a Limited Liability Company. The business decisions of an LLC are made by the members unless the articles of organization provide that the LLC will controlled by a manager or managers.

Membership Interest A member's ownership of an LLC is represented by "interests" just as a partner has an interest in a partnership and shareholders own stock in a corporation.

memorandum of association a legal document that lays down the objects of a registered company and details of the regulation of the company’s business dealings. It is one of the two fundamental documents upon which registration of any company is based. See articles of association.

memos Written records supporting journal entries. Credit memos support credits, while debit memos support debit entries.

MENTION – A brief item in the press or broadcast media referring to a person, product, or service.

Mentor - A business, usually large, or other organization that has created a specialized program to advance strategic relationships with small businesses.

MER (Management Expense Ratio) is the percentage of the assets that were spent to run a mutual fund. It includes things like management and advisory fees, travel costs and 12b-1 fees. The expense ratio does not include brokerage costs for trading the portfolio. Also referred to as the Expense Ratio.

Merchandise goods that may be sold or traded.

Merchandising trading in a range of goods. Promoting the whole range of goods that are sold in a business.

merchant middleman  a middleman that actually takes title to products by buying them

merchant wholesaler  a middleman that purchases goods in large quantities and then sells them to other wholesalers or retailers and to institutional, farm, government, professional, or industrial users

Merger - A combination of two or more corporations wherein the dominant unit absorbs the passive ones, the former continuing operation usually under the same name. In a consolidation two units combine and are succeeded by a new corporation, usually with a new titl

Merger A merger occurs when two corporations join together into one, with one corporation surviving and the other corporation disappearing. The assets and liabilities of the disappearing entity are absorbed into the surviving entity.

merger  the purchase of one corporation by another

MERGER, generally, is any combination of two companies. Specifically, it is an acquisition where all assets and liabilities are acquired and absorbed by the purchaser.

MESSAGE – The underlying theme or idea in advertisement.

MICR EQUIPMENT (Magnetic Ink Character Reader): Equipment used to imprint machine readable code. Generally, financial institutions use this equipment to prepare paper data for processing, encoding (imprinting) items such as routing and transit numbers, account numbers and dollar amounts.

Micro-Loan: Can be defined in terms of the size of the business loan amount requested; usually micro-loans are considered loans in the range of $1,000-$5,000.

MID-CAP is a stock with a capitalization, total equity value, between $500 million and $5 billion.

MIDDLE AMERICA – The moderate, middle-class segment of the U.S. population that comprises the largest consumer group.

middle manager  a manager who implements the strategy and major policies developed by top management

MIDDLE MARKET COMPANY: see Mid-Cap.

Middle Market: A market segment generally represented by financing under $2 million.  In leasing this sector is dominated by single investor leases.

middleman (or marketing intermediary)  a marketing organization that links a producer and user within a marketing channel

MILLAGE is a rate (as of taxation) expressed in mills per dollar.

MINIMUM WAGE is the lowest compensation you are allowed to pay an employee for hourly work. It is defined by Federal, state, and sometimes local laws. State or local laws may be more restrictive than Federal law, and certainly may differ.

Minimum Wage:  The lowest compensation you are allowed to pay an employee for hourly work. It is defined by Federal and state laws. State laws may be more restrictive than Federal law, and certainly may differ.

MINORITY BUSINESSES The Small Business Administration defines minorities as those who are "socially and economically disadvantaged." The U.S. Code of Federal Regulations (CFR) contains the specific requirements.

MINORITY INTEREST is the interest or percentage ownership of a group of stockholders who, in total, own less than 50% of the shares in the corporation.

minority  a racial, religious, political, national, or other group regarded as different from the larger group of which it is a part, and that is often singled out for unfavorable treatment

Minutes A written record which details the events of the corporation. These records should be kept in the corporation's or LLC's record book.

Minutes: A written record of the activities of a meeting.

misappropriate To embezzle or appropriate dishonestly for one's own use.

Miscellaneous cash flows Cash flows incidental to the operations or life cycle of the firm that cannot appropriately be placed in any of the other three categories. Examples include: gifts or inheritances received by the firm, gifts given by the firm, mysterious disappearances of cash held by the firm, etc.

MISCELLANEOUS INCOME is that income realized that is not directly related to the sale of standard products and services.

mission  a statement of the basic purpose that makes an organization different from others

missionary salesperson  a salesperson—generally employed by a manufacturer—who visits retailers to persuade them to buy the manufacturer’s products

misstatement Stated wrongly or falsely. Untrue financial statement information.

mitigating Reducing in force or intensity.

mixed economy  an economy that exhibits elements of both capitalism and socialism

MOBILE HOT SITE: A large trailer containing backup equipment and peripheral devices delivered to the scene of the disaster. It is then hooked up to existing communication lines.

MOCKUP – A scale-dimensional display model used in planning.

mode  the value that appears most frequently in a set of data

MODEM (Modulator Demodulator Unit): Device that converts data from analog to digital and back again.

Modem: A device used to connect your computer to other computers by using telephone lines. Modems are rated at their transfer rate (rated in Kilobytes per second (KBPS)). Current designs are 28.8 KBPS, 33.6 KBPS, and 56 KBPS. While faster may seem better, the higher speed is only available when a very good connection is made between your computer and the one you are calling. Most modems sold today are 56 KBPS, and automatically slow down for poor phone connections.

MODIFIED ACCELERATED COST RECOVERY SYSTEM (MACRS) is a system used in accounting to define the rate and method under which a fixed asset will be depreciated for tax purposes.

Modified Accelerated Cost Recovery System (MACRS). The system for computing depreciation for most business assets.

MODIFIED ACCRUAL BASIS accounting is a mixture of the cash and accrual

Modified Accrual:  An accounting method that is a combination of cash and accrual basis. Recognition is given to revenue when it is available and measurable. Expenditures are usually reflected in the accounting period in which the liability is incurred.

Modified Adjusted Gross Income. Your AGI (adjusted gross income) computed without considering any passive activity loss, IRA or SEP plans, taxable social security or the deduction for one-half of the self-employment tax.

MONETARY is anything pertaining to or having to do with money, money creation, money supply, and the government management of money.

monetary policies  Federal Reserve’s decisions that determine the size of the supply of money in the nation and the level of interest rates

money market deposit accounts — A bank account that pays a variable rate of interest based loosely on market rates. Often used by people who need to keep money readily available, but want to try for a higher return than on regular bank accounts. Added bonus: they’re federally insured.

money market funds — Funds that put their money in short-term investments. Considered pretty safe because the funds invest in such things as U.S. government securities and bank certificates of deposit.

MONEY MEASUREMENT CONCEPT stipulates that all business transactions must be expressed in money terms, i.e., if something cannot be measured in money; it will not be included in accounting books.

money  anything a society uses to purchase products, services, or resources

monopolistic competition  a market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors

monopoly — What you tried for in the game with the same name: complete domination of a market. When you have a monopoly, you have no competitors for what you’re selling.

monopoly  a market (or industry) with only one seller

morale  a person’s attitude about his or her job, superiors, and about the firm itself

MORTALITY RATE - Number of persons out of a large group (usually 100,000) who, experience shows, will live to reach each age up to the death of the last survivor; inferentially establishing the expectancy of life of the average person of each age.

Mortgage - An instrument giving legal title to secure the repayment of a loan made by the mortgagee (lender). In legal contemplation there are two types: (1) title theory - operates as a transfer of the legal title of the property to the mortgagee, and (2) lien theo

Mortgage A deed, usually to real estate, given to secure the repayment of a loan made by the mortgagee (lender).

mortgage bond  a corporate bond that is secured by various assets of the issuing firm

Mortgage the transfer of right of ownership of a property from a debtor to a creditor as security for a debt, with the proviso that once the debt is paid ownership is transferred back.

Mortgage: A written pledge of real property to assure payment of a debt, allowing for sale of the real property to satisfy the debt, in event of default. Also known as “deed of trust.”

Mortgagee the organisation or person to whom the property is mortgaged. In the case of a bank loan, the organisation is usually the bank.

Mortgagee. A lender who loans money to a mortgagor. The loan is usually secured by real estate or other property.

Mortgagor a person who mortgages a property.

Most Favored Nation Treatment (MFN): When one country accords another most-favored nation status, it agrees to extend to that country the same trade concession it grants to other MFN recipients.  GATT members have agreed to accord each other MFN status.  Preferential treatment accorded developing countries, customs unions and free trade areas all represent allowable exceptions to the MFN concept.  This is sometimes now called "Normal Trading Relations."

motivating  the process of providing reasons for people to work in the best interests of the organization

motivation factors  job factors that increase motivation, but whose absence does not necessarily result in dissatisfaction according to the motivation-hygiene theory

motivation  the individual, internal process that energizes, directs, and sustains behavior; the personal "force" that causes us to behave in a particular way

motivation-hygiene theory  the idea that satisfaction and dissatisfaction are distinct and separate dimensions

Mouse: A small pod-shaped device used to move the "pointer" or cursor on your screen. A variation of this device is a "rollerball", which has a small ball inset on the top of the device; the user moves the cursor by moving the ball around, usually with one's thumb.

multilateral development bank (MDB)  an internationally supported bank that provides loans to developing countries to help them grow

multinational enterprise  a firm that operates on a worldwide scale, without ties to any specific nation or region

Multiple Line Insurance. An insurance policy that combines both liability and property damage coverage and insures against a range of perils.

MULTIPLE same as Price/Earnings Ratio

multiple-unit pricing  the strategy of setting a single price for two or more units

municipal bond — These bonds are issued by state or local government entities, such as cities and counties. Interest earned is generally tax-free.

municipal bond  a debt security issued by a state or local government

Mutual Agency:  The right of all partners in a partnership to act as agents for the normal business operations of the partnership, with the authority to bind it to business agreements.

mutual fund  a professionally managed investment vehicle that combines and invests the funds of many individual investors

mutual funds — These funds pool money from many investors, and fund managers invest the money in specific types of securities. Money market funds are a type of mutual fund.

mutual insurance company  an insurance company that is collectively owned by its policyholders and is thus a cooperative

mutual savings bank  financial institutions that are owned by their depositors and offer many of the same services offered by savings and loan associations

Name Reservation The name of a corporation or LLC must be distinguishable on the records of the state government. If the name is not unique, the state will reject the articles of incorporation or articles of organization (for LLCs). A name can be reserved, usually for 120 days, by applying with the proper state authorities and paying a fee.

narrative A written description of an internal control system.

NASDAQ (The National Association of Securities Dealers Automated Quotations System) — A computerized system that lists price quotes for many over-the-counter stocks, as well as some other stocks.

NASDAQ  a computerized electronic exchange through which most over-the-counter securities are traded

NATIONAL – A commercial running throughout the country.

National Alliance of Business (NAB)  a joint business-government program to train the hard-core unemployed

National Association of Securities Dealers (NASD)  the organization responsible for the self-regulation of the over-the-counter securities market

national bank  a commercial bank chartered by the U.S. Comptroller of the Currency

national debt  the total of all federal deficits

National Labor Relations Act — Federal law that created the National Labor Relations Board to supervise union elections and that banned certain unfair labor practices by employers. The NLRB can rule on whether labor practices are unfair, although the decisions are appealable to the courts.

National Labor Relations Board (NLRB)  the federal agency that enforces the provisions of the Wagner Act

National Treatment: The concept that countries must afford foreign companies the same access and other benefits they do local domestic firms.

NATURAL CLASSIFICATION of costs focuses on the nature of the cost item. In this classification structure, the total operating costs of an activity can be classified into manufacturing costs and commercial costs. Manufacturing costs include all direct materials and direct labor, as well as, factory overhead. Such factory overhead costs include indirect materials (such as factory supplies & lubricants), indirect labor (such as supervision and inspection) and other indirect costs (such as rent, insurance, and utilities). Commercial expenses include marketing expenses (such as advertising, printing, and sales salaries) and administrative (general and administrative (G&A)) expenses (such as administrative office salaries, rent, and legal expenses).

natural monopoly  an industry requiring huge investments in capital and within which duplication of facilities would be wasteful and thus not in the public interest

NATURAL THREATS: Events caused by nature causing disruptions to an organization.

near-immediate execution.

need  a personal requirement

negative assurance A statement of what the CPA does not know as opposed to a statement as to what the CPA believes (positive assurance). A statement that the CPA was "not aware of material modifications that should be made to financial statements for them to conform with U.S. generally accepted accounting principles" is negative assurance used in review reports.

negative confirmation request The negative form of accounts receivable confirmation asks the client's customer to respond only if the customer disagrees with the balance determined by the client. The positive form asks the customer to respond whether the customer agrees or disagrees with the client's receivable balance. The negative form is used when controls over receivables are strong and accounts receivable consists of many accounts with small balances. The positive form is used when controls are weak or there are fewer, but larger, accounts.

negative gearing is when an investment is purchased with the assistance of borrowed funds and where the income from that investment (after the deduction of expenses) is less than the interest commitment in the course of a year

negligence  a failure to exercise reasonable care, resulting in injury to another

NEGOTIABLE INSTRUMENT is an unconditional order or promise to pay an amount of money; it is easily transferable from one person to another, e.g. a check, promissory note, bearer bond, and draft (bill of exchange).

negotiable instrument  a written document that (1) is a promise to pay a stated sum of money and (2) can be transferred from one person or firm to another

Negotiated Grievance Procedure - The sole and exclusive procedure available to all employees in a bargaining unit and the employer for processing grievances and disputes.

negotiated pricing  occurs when the final price is established through bargaining between the seller and the customer

Negotiating bank: Bank nominated on a letter of credit to negotiate the bill of exchange, i.e. check the documents, pay the seller and seek reimbursement from the Issuing bank.

Negotiation - The "face to face" process used by local unions and the employer to exchange their views on those matters involving personnel policies and practices, or other matters affecting the working conditions of employees in the unit and reduced to a written bindi

Negotiation Dispute - That point in negotiations where labor and management cannot come to an agreement on some or all of the issues on the bargaining table and the services of the FMCS have not been utilized.

Negotiation:  discussion and give and take leading to an agreement.  In respect to Letters of credit is means “buying” of a bill of exchange drawn on another party.  In situations where letters of credit are settled by negotiation, a negotiating bank may be nominated to check the documents, pay the seller and seek reimbursement from the Issuing bank. Alternatively the credit may be freely negotiable at any bank.

neighborhood shopping center  a planned shopping center consisting of several small convenience and specialty stores

net asset value (NAV)  current market value of a mutual fund’s portfolio minus the mutual fund’s liabilities, divided by the number of outstanding shares

Net Assets:  Owners Equity. The ownership interest in the assets of an entity. Total assets minus Total liabilities.

NET CHANGE IN CASH is calculated by adding cash from operating, investing, and financing activities and foreign exchange effects from the Statement of Cash Flows.

NET CONTRIBUTION is the amount remaining after all relevant deductions have been made to the gross amount, e.g., Net Contribution to Margin.

net income — The bottom line, after everything is paid up, including taxes. What’s left after all expenses are deducted from total revenue. Dividends are paid from net income.

NET INCOME (LOSS) - Gross profit minus business expenses, minus interest expensesm minus taxes. A loss results when expenses exceed revenues.

NET INCOME is the difference between a businesses total revenue and its total expenses. This caption and amount is usually found at the bottom of a company's Profit and Loss statement. Same as Net Profit.

net income  the profit earned (or the loss suffered) by a firm during an accounting period after all expenses have been deducted from revenues

Net Income:  The difference between your business' total revenues and its total expenses. This caption and amount is usually found at the bottom of a company Income Statement (also known as "The Bottom Line").

Net Lease: A lease wherein payments to the lessor do not include insurance and maintenance, which are paid separately by the lessee.

NET LEASES, typically, there are three net leases: net lease, double-net lease, and triple-net lease. A net lease is a base rent plus an additional charge for taxes. A double-net lease is a base rent plus an additional charge for taxes and insurance. A triple-net lease is base rent plus an additional charge for taxes, insurance, and common area expenses.

NET OPERATING INCOME (NOI) is income after deducting for operating expenses but before deducting for income taxes and interest.

NET OPERATING LOSS (NOL) is experienced by a business when business deductions exceed business income for the fiscal year. For income tax purposes, a net operating loss can be used to offset income in a prior year, or a taxpayer can elect to forego the carry back and carry the net operating loss forward.

Net operating loss. The excess of business expenses over income. A business may apply a net operating loss to get a refund of past taxes (or a reduction of future taxes) by carrying it back to profitable years as an additional deduction (or by carrying it forward as a deduction to future years).

Net Operating Loss:  A net operating loss results when business expenses exceed business income for the operating period.

NET PRESENT VALUE (NPV) is a method used in evaluating investments, whereby the net present value of all cash outflows (such as the cost of the investment) and cash inflows (returns) is calculated using a given discount rate, usually REQUIRED RATE OF RETURN. An investment is acceptable if the NPV is positive. In capital budgeting, the discount rate used is called the HURDLE RATE and is usually equal to the INCREMENTAL COST OF CAPITAL.

Net Profit - result obtained when expenses are subtracted from revenues.

Net Profit - total revenues less total expenses.

NET PROFIT is the company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Same as Net Income.

NET PROFIT MARGIN (NPM After Tax) measures profitability as a percentage of revenues after consideration of all revenue and expense, including interest expenses, non-operating items, and income taxes. For a business to be viable in the long term profits must be generated; making the net profit margin ratio one of the key performance indicators for any business. It is important to analyze the ratio over time. A variation in the ratio from year-to-year may be due to abnormal conditions or expenses which need to be addressed. A decline in the ratio over time may indicate a margin squeeze suggesting that productivity improvements may need to be initiated. In some cases, the costs of such improvements may lead to a further drop in the ratio or even losses before increased profitability is achieved.