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Financial Terms | |
Transaction |
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
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Definition of TransactionTransactionThe financial description of a business event. TransactionA business event that has a monetary impact on an entity’s financial statements,
Related Terms:Cash transactionA transaction where exchange is immediate, as contrasted to a forward contract, which Going-private transactionsPublicly owned stock in a firm is replaced with complete equity ownership by a Highly leveraged transaction (HLT)Bank loan to a highly leveraged firm. Intercompany transactiontransaction carried out between two units of the same corporation. Picking transactionWithdrawing parts or subassemblies from stock in order to Realizable Revenue A revenue transaction where assets received in exchange for goods andservices are readily convertible into known amounts of cash or claims to cash. ![]() Round-trip transactions costsCosts of completing a transaction, including commissions, market impact Structured arbitrage transactionA self-funding, self-hedged series of transactions that usually utilize Taxable transactionAny transaction that is not tax-free to the parties involved, such as a taxable acquisition. Transaction demand (for money)The need to accommodate a firm's expected cash transactions. Transaction exposureRisk to a firm with known future cash flows in a foreign currency that arises from Transaction loanA loan extended by a bank for a specific purpose. In contrast, lines of credit and revolving Transactions costsThe time, effort, and money necessary, including such things as commission fees and the Transactions motiveA desire to hold cash for the purpose of conducting cash based transactions. 48-hour ruleThe requirement that all pool information, as specified under the PSA Uniform Practices, in a ![]() ABC inventory classificationA method for dividing inventory into classifications, AccountAn explanation or report in financial terms about the transactions of an organization. AccountingA collection of systems and processes used to record, report and interpret business transactions. Accounting systemA set of accounts that summarize the transactions of a business that have been recorded on source documents. Accounts‘Buckets’ within the ledger, part of the accounting system. Each account contains similar transactions (line items) that are used for the production of financial statements. Or commonly used as an abbreviation for financial statements. Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity Antidilutive effectResult of a transaction that increases earnings per common share (e.g. by decreasing the Arbitragetransactions designed to make a sure profit from inconsistent prices. AssetA resource, recorded through a transaction, that is expected to yield a benefit to a AssetProbable future economic benefit that is obtained or controlled by an entity as a result of Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Automated Clearing House (ACH)A collection of 32 regional electronic interbank networks used to Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. Balance of paymentsA statistical compilation formulated by a sovereign nation of all economic transactions Balance of Payments AccountsA statement of a country's transactions with other countries. Bank reconciliationA comparison between the cash position recorded on a company’s Banker's acceptanceA short-term credit investment created by a non-financial firm and guaranteed by a Bin transferA transaction to move inventory from one storage bin to another. Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering Buy on marginA transaction in which an investor borrows to buy additional shares, using the shares Capital leaseA lease in which the lessee obtains some ownership rights over the asset Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Capital market imperfections viewThe view that issuing debt is generally valuable but that the firm's CashAmounts held in currency and coin (commonly referred to as petty cash) and amounts on deposit in financial institutions. Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations Cash Flow Provided by Operating ActivitiesWith some exceptions, the cash effects of transactions Cash receipts journalA journal used to record the transactions that result in a debit to cash. Clearing house / ClearinghouseAn adjunct to a futures exchange through which transactions executed its floor are settled by a Closing purchaseA transaction in which the purchaser's intention is to reduce or eliminate a short position in Closing saleA transaction in which the seller's intention is to reduce or eliminate a long position in a stock, ContractA term of reference describing a unit of trading for a financial or commodity future. Also, the actual ContractA formal written statement of the rights and obligations of each party to a transaction. Cost of capitalThe blended cost of a company’s currently outstanding debt instruments Counterparty Partyon the other side of a trade or transaction. Counterparty riskThe risk that the other party to an agreement will default. In an options contract, the risk Currency risk sharingAn agreement by the parties to a transaction to share the currency risk associated with Current accountNet flow of goods, services, and unilateral transactions (gifts) between countries. Cutoff controlA procedure for ensuring that transaction processing is completed Debt securitiesIOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and Debt swapA set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank Delivery versus paymentA transaction in which the buyer's payment for securities is due at the time of Dilutive effectResult of a transaction that decreases earnings per common share. DisclosureAdditional information attached to a company’s financial statements, usually Double entryThe system of recording business transactions in two accounts. Drop, theWith the dollar roll transaction the difference between the sale price of a mortgage-backed passthrough, Due DiligenceThe process of systematically evaluating information, to identify risks and issues relating to a proposed transaction.(i.e. verify that information is what it is proposed to be). e-commerce (electronic commerce)any business activity that uses the Internet and World Wide Web to engage in financial transactions economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. Edge corporationsSpecialized banking institutions, authorized and chartered by the Federal Reserve Board Emerging Issues Task Force (EITF)A special committee of the Financial Accounting Standards Board established to reach consensus of how to account for new and unusual financial transactions that have the potential for creating differing financial reporting practices. Emerging Issues Task Force (EITF)A separate committee within the Financial Accounting Standards Board composed of 13 members representing CPA firms and preparers of financial statements EntryThe act of recording an accounting transaction in the accounting books. Exercise valueThe amount of advantage over a current market transaction provided by an in-the-money Expense ratioThe percentage of the assets that were spent to run a mutual fund (as of the last annual Extraordinary itemA transaction that rarely occurs, and which is unusual, such as Fair ValueThe amount at which an asset could be purchased or sold or a liability incurred or Fictitious RevenueRevenue recognized on a nonexistent sale or service transaction. financial accountinga discipline in which historical, monetary Forward contractA cash market transaction in which delivery of the commodity is deferred until after the Forward deliveryA transaction in which the settlement will occur on a specified date in the future at a price forward rate of exchangeExchange rate for a forward transaction. Forward tradeA transaction in which the settlement will occur on a specified date in the future at a price Friction costsCosts, both implied and direct, associated with a transaction. Such costs include time, effort, FrictionsThe "stickiness" in making transactions; the total hassle including time, effort, money, and tax Futures contractAgreement to buy or sell a set number of shares of a specific stock in a designated future General ledgerThe master set of accounts that summarizes all transactions occurring Generally accepted accounting principlesThe rules that accountants follow when processing accounting transactions and creating financial reports. The rules are primarily HaircutThe margin or difference between the actual market value of a security and the value assessed by the HedgeA transaction that reduces the risk of an investment. HedgeA securities transaction that reduces or offsets the risk on an existing Information coststransaction costs that include the assessment of the investment merits of a financial asset. internal accounting controlsRefers to forms used and procedures Interplant transferThe movement of inventory from one company location to Inventory adjustmentA transaction used to adjust the book balance of an inventory Inventory issueA transaction used to record the reduction in inventory from a location, InvestmentsAs a discipline, the study of financial securities, such as stocks and bonds, from the investor's InvoiceA document submitted to a customer, identifying a transaction for which the Journal entryThe formal accounting entry used to identify a business transaction. The JournalizingThe process of taking a transaction and putting it into a form that allows it to be recorded in the accounting records. LedgerA collection of all the different accounts of the business that summarize the transactions of the LedgerA book or database in which accounting transactions are stored and summarized. Leverage rebalancingMaking transactions to adjust (rebalance) a firm's leverage ratio back to its target. Leveraged buyout (LBO)A transaction used for taking a public corporation private financed through the use Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |