Classification of Assets and Liabilities

Assets may be divided into five general groups, namely, fixed or capital assets, working and trading assets, current assets, miscellaneous or special assets and deferred charges to expense.

Fixed or capital assets are those which represent that portion of the capital of the organization invested in assets which are more stable in their nature; those which tend toward permanency in their character. Among this group will be found, property and plant, composed of real estate (technically representing land but more commonly found to include both land and buildings), and equipment (including machinery, tools, power plant and other operating or auxiliary equipment). Other items in the group are furniture and fixtures, outside investments, comprised of stocks and bonds of other companies, and bonds and mortgages of other companies or individuals.

Working and trading assets are those which represent that portion of the capital which is invested in assets, (a) available for use in creating the product, or service, which the organization offers for sale, (b) involved in the process of creating the product, or (c) in product completed and ready for sale. This group is usually represented by inventories, and includes materials and supplies, goods in process of manufacture and finished goods; also items incidental to the operation or conduct of the business, such as the inventories of coal, oil, and waste, stationery, postage, etc.

Current assets are those which represent that portion of the capital which is invested in assets maturing within a short time; those which may be realized upon readily or converted into cash; those which are available for the liquidation of current liabilities. They include, cash in hand, deposits, working funds, accounts receivable, notes receivable, and interest which has accrued. They are sometimes called “liquid” assets.

Special or miscellaneous assets, as a group, are difficult to define on account of their varied natures. Certain of them may represent investment of capital. Some of them may represent reserves or surplus. In some instances the accounts may be balanced by offsetting accounts reflecting direct liabilities or contingent liabilities; in others, the account may be maintained as a memorandum, in order that certain things may not be lost sight of, and be balanced by an offsetting account for the purpose of maintaining equilibrium. This group comprises, patents, copyrights, trademarks, good-will, sinking funds, leaseholds, contract rights, franchises, treasury stock, notes receivable discounted, and consignments received. Such items as patents, copyrights, trademarks, good-will, leaseholds and franchises might represent investments of capital. On the other hand some of them might be acquired by gift or by accumulation, in which cases they would probably be offset by reserves or surplus. Sinking funds are usually set aside to provide for the liquidation of some liability and would constitute a setting aside of capital unless the funds were offset by a reserve accumulated out of profits. Notes receivable discounted would be offset by an account merely for the purpose of maintaining an equilibrium.

Deferred charges to expense, constituting the last group, may be defined as investments of capital in items of expense not applicable to the accounting, or fiscal, period in which they originate, the charge to expense for which is deferred to a subsequent period. They are sometimes called “assets by courtesy.” They embrace all prepaid expenses, prominent among which are, insurance, taxes, rent, advertising, organization expense, moving expense, etc.

Liabilities may be divided into four general groups: capital liabilities, current liabilities, special liabilities, and deferred credits to income. Reserves are sometimes classified as liabilities, but it would appear to be more nearly correct to consider them as a portion of the capital or proprietorship, which has been set aside for specific purposes, and they will be so considered and treated in this discussion.
Capital liabilities are those which arise in connection with capital obtained for investment in the business. If specific at all with regard to their maturity, they are usually obligations, the term of which extends over a period of years. They are usually of such a nature, that they do not become due until the date specified for their maturity, except by special provision in the instrument whereby they are represented. When such provision exists, it is usually in the form of a right accruing to the holder of the obligation, by virtue of which he may enforce collection if interest on the obligation is not paid when due. Among capital liabilities are found, bonds, debentures, long-term notes, etc.

Current liabilities are those which mature within a short time. They are those for which funds must be obtained to provide for their liquidation. They are the obligations incurred in connection with operating expenses, the securing of materials and supplies, the purchase of trading goods, or obtaining of current funds. They are the constantly maturing obligations which must be met out of the realization of current assets. They include such items as taxes accrued, wages accrued, accounts payable, notes payable, interest accrued, dividends payable.

Special liabilities are perhaps not liabilities in a strict sense of the word. Accounts for them are, however, frequently found in the books and they should not be passed over without explanation. They frequently represent a condition of accountability, rather than liability, and in some cases where a liability might be expected to exist it is contingent upon the realization of some existing asset. Prominent in this group are consigned sales and notes receivable discounted. In some instances it is also made to include an account with consignors for goods received on consignment.

Deferred credits to income, represent income which has been received in a period prior to that to which it is applicable. In cases of this kind payment has usually been received in advance on account of right, services, or goods which will not be delivered until some subsequent period. They are sometimes referred to as deferred liabilities and include such items as rents and royalties, etc., received in advance.
Reserves are to be considered as capital, set aside for specific purposes, rather than direct liabilities. If it is true, that capital or proprietorship is an accountability, rather than a liability, it is probably also true that reserves are accountabilities, rather than liabilities.

Proprietorship is that financial investment which is represented by the excess of assets over liabilities. It may be expressed in several ways, depending upon the type of organization. It may be restricted or unrestricted. It may be restricted, in that it is set aside as a reserve for the purpose of providing for the depreciation of some of the physical assets, or a possible loss through failure to collect outstanding accounts. As unrestricted, it may appear as capital of the proprietor, or in the case of a corporation, as capital stock, undistributed profits, or surplus. As capital stock it may be either common or preferred. It may also be represented by temporary evidence of its existence in the form of scrip.

It would appear to be appropriate at this time to discuss a question with regard to proprietorship upon which there is some difference of opinion among accountants. The subject for discussion may be presented in the form of the question “Is proprietorship a liability?” The arguments for and against, considering proprietorship as a liability, will also bring out the reason why English accountants place liabilities on the left hand side of the balance sheet, rather than upon the right hand side, as is the custom in this country. Whether or not, proprietorship is a liability depends entirely upon the viewpoint of the accountant. It depends upon whether or not there is a distinction made between the financial status of an individual, as an individual and a business entity. In other words, when John Jones engages in business, the question to be decided is, shall he be regarded as an individual who has invested money in a business organization and which organization is indebted to him for the funds so invested, or as the organization itself? In order to make the situation conform to the first suggestion it is necessary to raise a theoretical entity in the form of John Jones, Proprietor, which is indebted to John Jones, Individual, for funds invested. Under such circumstances and with the creation of such theoretical entity, it would be quite proper to consider the account of John Jones, Proprietor, as a liability, were it not for the fact that the law does not recognize such a distinction. If perchance the assets of John Jones, Proprietor, are insufficient to liquidate the liabilities of John Jones, Proprietor, the law permits any assets of John Jones, Individual, to be appropriated by due process of law and applied to the liquidation of outstanding liabilities of the business.

Looking at it from the other point of view, there is no distinction made between John Jones, Individual, and John Jones, Proprietor. John Jones is the business; whatever assets the business may have are his. Whatever liabilities exist he must liquidate. The excess of assets over liabilities constitutes his equity in the organization, or the extent of his proprietary interest; it is his capital. What he possesses he cannot very well be liable to himself for. He cannot sue himself for the capital which he has invested in the business. Upon such grounds it would appear to be more reasonable and logical to consider proprietorship as an accountability rather than a liability. The positive and negative forces of his business organization account for his financial condition. While he is able to determine his financial condition through having his account stated, there is no liability. He cannot enforce collection. If he desires to obtain the funds, or the capital, invested in the business he is forced to wind up his affairs as a proprietor either through realization and liquidation of the concern, or a sale to other interests.

It was probably from the first interpretation of organization above stated that the English placed liabilities on the left hand side and assets on the right hand side of the balance sheet. It has been said that while this is required by law that it was due to ignorance of accounting on the part of the framers of the law that such provision was made. This may, or may not have been the case, but at all events such has become an established practice with the English accountants. The business is considered as a distinct entity, liable to the proprietor, for the excess of assets over liabilities in favor of other creditors.

Glossary

abstraction n. a general idea not based on any particular real person, thing or situation;

accomplish v. to succeed in doing or completing smth;

accounting n. the process of work of keeping financial accounts;

acquire v if one company acquires another, it buys it;

acquisition n. when one company buys another or part of another company, or the company or part of a company that is bought;

administration n. the executive function of a business or a government;

advertising campaign n. an organization's programme of advertising activities over a particular period with specific aims, for example an increase in sales or awareness of a product;

advise v. 1 to inform; 2 to suggest;

affect v. to influence smth;

agenda n. a list of the subjects to be discussed at a meeting;

aggressive adj. very determined to win or succeed;

alliance n. an agreement between two or more organizations to work together;

AOB n. any other business; the time during a meeting when items not on the agenda can be discussed;

application n. 1 a formal, usually written, request for something or for permission to do something 2 a formal request for work;

apply v. 1 to make a formal, usually written request for something, especially a job, a place at university, or permission to do something 2 to use something such as a law or an idea in a particular situation, activity, or process;

appraisal n. process of estimating the value of a parcel of real estate;

approach n. a way of dealing with sth/sb, a way of doing or thinking about sth such as a problem or a task;

approximate adj. an approximate amount, number etc is a little more or a little less than the exact amount, number etc – approximately adv

asset n. something belonging to an individual or a business that has value or the power to earn money;

assets n. (plural) a company's assets are the things it owns;

assume v. to think or accept sth is true but without having proof of it;

authority n. the moral or legal right or ability to control;

awareness n. knowledge or understanding of a particular subject, situation, or thing

background n. someone's past, for example their education, qualifications, and the jobs they have had;

bank statement n. information sent regularly by a bank to a customer, showing the money that has gone into and out of their account over a particular period;

bankrupt ¹ n. someone judged to be unable to pay their debts by a court of law, and whose financial affairs are handled by a court official until the debts are settled;

bankrupt² adj. not having enough money to pay your debts;

bankruptcy n. plural bankruptcies when someone is judged to be unable to pay their debts by a court of law, and their assets are shared among their creditors (=those that they owe money to), or a case of this happening;

barrier to trade also trade barrier n. plural barriers to trade something that makes trade between two countries more difficult or expensive, for example a tax on imports

benchmark for n. something that is used for comparing and measuring other things

benefits package n. the total amount of pay and all the other advantages that an employee may receive such as bonuses, health insurance, a company car etc.;

bid n. 1 an offer to buy something, for example a company in a takeover, or the price offered 2 an offer to do work or provide services for a fixed price, in competition with other offers;

billboard n. AmE a large sign used for advertising. Billboards are usually called hoardings in British English;

blueprint n. a plan for achieving or improving something;

board also board of directors n. the group of people who' have been elected by shareholders to manage a company;

bonus n. an extra amount of money added to an employee's wages, usually as a reward for doing difficult work or for doing their work well;

boom¹ n. 1 a time when business activity increases rapidly, so that the demand for goods increases, prices and wages go up, and unemployment falls 2 a time when activity on the stock market reaches a high level and share prices are very high;

boom² v. if business, trade, or the economy is booming, it is very successful and growing;

brand leader n. the brand with the most sales in a particular market;

bribe¹ n. money that is paid secretly and dishonestly to obtain someone's help;

bribe² v. to dishonestly give money to someone to persuade them to do something that will help you;

bribery n. dishonestly giving money to someone to persuade them to do something to help you;

broker n. a person or organization whose job is to buy and sell shares, currencies, property, insurance etc for others;

bureaucracy n. plural bureaucracies 1 a system of governing that has a large number of departments and officials 2 disapproving all the complicated rules and processes of an official system, especially when they are confusing or responsible for causing a delay;

business cycle n. a period during which business activity and general employment alternatively rise and fall;

capital n. 1 any kind of wealth that is available to support the activities of producing goods and services, that is, of creating more wealth 2 private money and resources which are used to pay for the cost of setting up and running a business;

cash flow also cashflow n. 1 the amounts of money coming into and going out of a company, and the timing of these 2 profit for a particular period, defined in different ways by different businesses;

cash generation n. money that a company gets from sales after costs are taken away. Cash generation is often used in talking about the degree to which the company is able to do this;

categorize v. to put people or things in groups according to what type they are;

centralized organisation n. an organisation in which almost all authority is concentrated in a few positions at the top;

chain of command n. the downward flow of authority, responsibility, and channels of communications within an organisation;

chair n. 1 the position of being the chairman of a company or organization or the person who is chairman 2 the position of being in charge of a meeting or the person who is in charge of it – chair v.

chairman n. the person who is in charge of a committee, a company, etc.

challenge n. something that tests your skill or ability, especially in a way that is interesting;

charge v. to ask someone to pay a particular amount of money for goods, a service etc;

Chief Executive Officer (CEO) n. the manager with the most authority in the day to day management of a company, especially in the US. The job of CEO is sometimes combined with others, such as that of president;

clock v clock in/on phr. v. to record on a special card or computer the time you arrive at or begin work;

clock off/out phr. v. to record on a special card or computer the time you stop or leave work;

collapse v. if a company, organization, or system collapses, it suddenly fails or becomes too weak to continue – collapse n.

commission n.an amount of money paid to someone according to the value of goods, services, investments etc they have sold;

commitment n. a promise to do smth or to behave in a particular way;

committee n. a group of people within an organisation formally assigned the responsibility to discuss, or deal directly, with a well-defined matter;

commodity n. a substance or product that can be traded, bought or sold;

compensation n. 1 an amount paid to someone because they have been hurt or harmed in some way 2 the total of pay and benefits for an employee, especially a high-level manager;

competency n. the ability to do something to a level that is acceptable;

competitive advantage n. something that helps you to be better or more successful than others;

concept n. an idea for a product, business etc;

conceptual adj. related to or based on ideas;

concern v. to take an interest in smth; be concerned with sth adj be about smth;

conman n. someone who tries to get money from people by tricking them;

consortium n. plural consortiums or consortia a combination of several companies working together for a particular purpose, for example in order to buy something or build something;

consumer n. a person who buys goods or uses services;

consumer behaviour BrE consumer behavior AmE n. how, why, where, and when consumers buy things, and the study of this;

control v. to check, to regulate standards;

controlling n. the mechanisms for checking the results;

controlling interest n. the situation where one shareholder owns enough shares to control a company;

controlling shareholder also majority shareholder n. someone who owns more than half the shares in a company;

cooperate v. to work together with smb else to achieve smth;

coordinate v. to determine the position, rank authority;

coordinating n. bringing into orderly relation of part and whole;

copycat product n. a product that copies a competitor's idea for a product;

core adj. core business/activity/product the business, activity etc that makes most money for a company and that is considered to be its most important and central one;

corrupt¹ adj. using power in a dishonest or illegal way in order to get money or an advantage of some kind;

corrupt² v. to encourage someone to behave in an immoral or dishonest way –corrupted adj., corruptible adj., corruptibility n.

corruption n. 1 the crime of giving or receiving money, gifts, a better job etc in exchange for doing something dishonest or illegal that helps another person or company 2 when someone who has power or authority uses it in a dishonest or illegal way to get money or an advantage;

cost n. the amount of money that you need to buy, make or do smth;

counterfeit¹ adj. made to look exactly like something else, usually illegally;

counterfeit² v. to copy something so that it looks like something else, usually illegally – counterfeiter n.

crash¹ n. 1 a time when many investments lose their value very quickly, usually when investors lose confidence in the market and sell 2 an occasion when a computer or computer software suddenly and unexpectedly stops working or fails to work properly;

crash² v. 1 if stock markets, shares etc crash, they suddenly lose a lot of value 2 if a computer crashes, or if you crash a computer, it suddenly and unexpectedly stops working;

creatively adv. involving the use of skill and the imagination to produce smth new;

crisis n. plural crises 1 a period or moment of great difficulty, danger, or uncertainty, especially in politics or economics 2 a time when a personal problem or situation has reached its worst point;

culture n. 1 the ideas, beliefs, and customs that are shared and accepted by people in a society 2 the attitudes or beliefs that are shared by a particular group of people or in a particular organization;

customs n. the government department responsible for collecting the tax on goods that have been brought into the country and making sure that illegal goods are not imported or exported;

data n. singular datum facts or information, especially when examined and used to find out things to make decisions;

deal with v. to solve a problem, to perform a task, etc.

deceit n. when someone tries to gain an advantage for themselves by tricking someone, for example by making a false statement;

deceive v. to make someone believe something that is not true in order to get what you want;

decentralized organisation n. an organisation in which much authority is delegated to managers who are close to the actual operations;

decision making n. the process of deciding about sth important, especially in a group of people or in an organization;

decline v. 1 if an industry or country declines, it becomes less profitable, productive, wealthy etc 2 if sales, output, production etc decline, they become less – decline n.

dedication n. the hard work and effort that smb puts into an activity or purpose because they think it is important;

defect n. a fault or the lack of something that means that a product etc is not perfect – defective adj., defectively adv.

demand n. 1 spending on goods and services by companies and people in a particular economy 2 the total amount of a type of goods or services that people or companies buy in a particular period 3 the total amount of a type of goods or services that people or companies would buy if they were available;

demerge v. if a company or unit demerges from a group, or if it is demerged, it becomes a separate company – demerger n.

deregulate v. if a government deregulates a particular business activity, it allows companies to operate more freely so as to increase competition – deregulation n.

design v. to decide how sth will look, work, especially drawing plans or making models;

determine v. to make sth happen in a particular way;

devious adj. using dishonest tricks and deceiving people to get what you want – deviously adv., deviousness n.

differentiation n. when a company shows how its products are different from each other and from competing products, for example in its advertising – differentiate v.

disclosure n. 1 the duty of someone in a professional position to inform customers, shareholders etc about facts that will influence their decisions 2 the act of giving information about someone by an organization or person who would normally have to keep that information secret, for example when a bank gives information about a customer's accounts to the police 3 a fact which is made known after being kept secret

dismissal n. when someone is removed from their job by their employer;

disposal n. 1 the act of getting rid of something 2 an asset that is sold, and the act of selling it;

dispose v. 1 if you dispose of something, you get rid of it 2 formal if a company disposes of a particular asset, activity etc, it sells it;

distribution n. the system of transporting and delivering goods;

distribution channel also distribution chain n. the way a product is made available and sold, the organizations involved etc;

diverse adj. very different from each other and of various kinds;

diversify v. 1 if a company or economy diversifies, it increases the range of goods or services it produces 2 to start to put your money into different types of investments in addition to the investments you already have – diversification n. – diversity n.

downmarket ¹ also downscale AmE adj. involving goods and services that are cheap and perhaps not of very good quality compared to others of the same type, or the people that buy them;

downmarket² also downscale AmE adv.

go/move downmarket/downscale to start buying or selling cheaper goods or services;

dress code n. the way that you are expected to dress in a particular situation, as an employee of a particular company etc;

drive n. 1 someone's energy, motivation, and ability to work hard 2 [usually singular] an effort to improve or increase the level of something;

drop¹ v. 1 to fall to a lower level or amount 2 to stop doing or planning something; drop away/off phr. v. to become lower in level or amount;

drop² n. [ usually singular] if there is a drop in the amount, level, or number of something, it goes down or becomes less;

dumping n. the activity of selling products in an export market cheaper than in the home market, or cheaper than they cost to make, usually in order to increase market share;

durable adj. if something is durable, it lasts a long time – durability n.

economies of scale n. [plural] the advantages that a bigger factory, shop etc has over a smaller one because it can spread its fixed costs over a larger number of units and thus produce or sell things more cheaply;

economy drive n. a planned effort by an organization to reduce costs;

effect n. a result or consequence of an action;

effectively adv. in a way that producers the intended result or a successful result;

efficiently adv. doing sth well and thoroughly with no waste of time or money;

emergence n. starting to exist;

employ v. 1 to pay someone to do a job 2 formal to use something;

employee n. a person who is paid to work for somebody;

endorse v. if someone, usually famous, endorses a product, they say how good it is in advertisements. People will buy the product because they like or trust the person – endorsement n.

entrepreneur n. an individual who uses personal initiative to organise a new business

equipment n. the things needed for a particular purpose or activity;

essential adj. extremely important in a particular situation or for a particular activity;

ethical adj. 1 connected with principles of what is right and wrong 2 morally good or correct – ethically adv.

ethics n. [plural] moral rules or principles of behaviour that should guide members of a profession or organization and make them deal honestly and fairly with each other and with their customers;

etiquette n. the formal rules for polite behaviour;

expand v. 1 to become larger in size, amount, or number, or to make something larger in size, amount, or number 2 if a company expands, it increases its sales, areas of activity etc – expansion n.

extent n. how large, important, serious etc. smth is;

extort v. to illegally force someone to give you money by threatening them – extortion n.

facet n. a particular part or aspect of smth;

facility¹ n. usually singular a helpful service or feature that a machine or system has;

facility² n. plural facilities 1 a place or large building which is used to make or provide a particular product or service 2 facilities [plural] special buildings or equipment that have been provided for a particular use, such as sports activities, shopping or travelling;

fake¹ adj. made to look like something valuable or genuine in order to deceive people;

fake² n. a copy of an original document, valuable object etc that is intended to deceive people into believing it is the real document, object etc;

fall¹ v. to go down to a lower price, level, amount etc;

fall² n. 1 a reduction in the amount, level, price etc of something 2 when a person or organization loses their position of power or becomes unsuccessful;

fee n.an amount of money paid for a particular piece of work;

fiddle n. BrE informal 1 a dishonest way of getting money or not paying money 2 be on the fiddle to be getting money dishonestly or illegally;

flaw n. 1 a mistake or weakness in a machine, system etc that prevents it from working correctly 2 a mistake in an argument, plan, or set of ideas;

flexible adj. 1 a person, plan etc that is flexible can change or be changed easily to suit any new situation 2 if arrangements for work are flexible, employers can ask workers to do different jobs, work part-time rather than full-time, give them contracts for short periods etc. Flexible working also includes job-sharing and working from home – flexibility n.

flexitime BrE also flextime AmE n. a system in which people who work in a company do a fixed number of hours each week, but can choose what time they start or finish work within certain limits;

flight of capital also capital flight n. when money is moved rapidly out of a country, usually because its economy is doing badly or there is political uncertainty;

fluctuate v. if prices, income, rates etc fluctuate, they change, increasing or falling often or regularly – fluctuating adj.

fluctuation n. the movement of prices, income, rates etc as they increase and fall;

focus group n. a group of people brought together to discuss their feelings and opinions about a particular subject. In market research, focus groups discuss their opinions of products, advertisements, companies etc;

focus n. when a company serves particular groups of customers in a market with particular needs, rather than serving the whole market;

franchise¹ n. 1 an arrangement in which a company gives a business the right to sell its goods or services in return for payment or a share of the profits 2 a particular shop, restaurant etc that is run under a franchise, or a company that owns a number of these

franchise² v. to sell franchises to people – franchising n.

franchisee n someone who is sold a franchise and operates it;

free port n. a port where import duty does not have to be paid on imports that are to be sent to another country to be sold, or used to manufacture goods that will be sold abroad;

functional organization n. an internal business structure in which all managers are assigned the responsibility for all activities and decisions in certain defined functional areas of operation;

global adj. 1 affecting or involving the whole world 2 including and considering all the parts of a situation together, rather than the individual parts separately – globally adv.

global economy n. [singular] the economy of the world seen as a whole;

globalization also -isation BrE n. the tendency for the world economy to work as one unit, led by large international companies doing business all over the world;

globalize also -ise BrE v. if a company, an industry, or an economy globalizes or is globalized, it no longer depends on conditions in one country, but on conditions in the world as whole;

goal n. an object of effort or ambition;

goodwill payment n. a payment made by a supplier to a customer because of a problem the customer has had, for example with quality or late delivery of goods;

gross domestic product (GDP) n. [singular] the total value of goods and services produced in a country's economy, not including income from abroad;

gross domestic product per capita n. [singular] the total value of goods and services produced in a country divided by the number of people living there;

grow v 1 to increase in amount, size, or degree 2 if you grow a business activity, you make it bigger;

growth n. an increase in size, amount, or degree;

headquarters n. [plural] the head office or main building of an organization – headquartered adj.

hierarchy n. a system in an organization in which people are organized into different levels of importance from highest to lowest;

hot-desking n. when people working in an office do not each have their own desk, but work where there is one available;

identify v. who or what smb/smth is;

impose on v. to officially order that something should be forbidden or taxed;

incentive n. something which is used to encourage people, especially to make them work harder, produce more or spend more money;

income statement n. AmE a financial document showing the amount of money earned and spent in a particular period of time by a company. This is usually called the profit and loss account in British English;

incremental adj. 1 an incremental process is one where things happens in small steps 2 an incremental amount, sum etc is small when considered by itself;

industrial espionage n. the activity of secretly finding out a company's plans, details of its products etc;

industry n. a collection of all the businesses that perform similar operations to provide the same kind of goods or services, for example, the steel industry;

infant industry n. an industry in its early stages of development in a particular country. Some people think that infant industries should be helped with government money and protected from international competition by import taxes etc;

infrastructure n. 1 the basic systems and structures that a country needs to make economic activity possible, for example transport, communications, and power supplies 2 the basic systems and equipment needed for an industry or business to operate successfully or for an activity to happen;

innovate v. to design and develop new and better products – innovator n.

innovation n. 1 a new idea, method, or invention 2 the introduction of new ideas or methods;

innovative adj. 1 an innovative product, method, process etc is new, different, and better than those that existed before 2 using clever new ideas and methods – innovatively adv.

insider trading n. when someone uses knowledge of a particular company, situation etc that is not available to other people in order to buy or sell shares. Insider trading is illegal.

insurance n. protection of oneself against risk by regularly paying a special company;

integrate v. to combine two or more things so that they work together;

integrity n. 1 the state of being united or kept together as one whole, and therefore strong, unit 2 complete honesty;

intelligence v. the ability to learn, understand and think in a logical way about things; the ability to do this well;

intended adj. that you are trying to achieve;

interact v. to communicate with smb, especially when you work with them;

interest n. 1 an amount paid by a borrower to a lender, for example to a bank by someone borrowing money for a loan, or by a bank to a depositor (=someone keeping money in an account there) 2 the interest rate at which a particular sum of money is borrowed and lent 3 the part of a company that someone owns 4 the possession of rights, especially to land, property etc;

inventory control n. AmE making sure that supplies of raw materials, work in progress, and finished goods are managed correctly. Inventory control is called stock control in British English;

inventory n. plural inventories AmE 1 a supply of raw materials or parts before they are used in production, or a supply of finished goods. Inventories of raw materials or parts are usually called stocks in British English 2 a supply of goods, kept for sale by a shop or other retailer. Inventories of goods are usually called stocks in British English;

ISO 9000 the ISO's quality standard for companies producing goods;

ISO 9001/9002 the ISO's quality standards for companies providing services;

ISO n. 1 the name used internationally for the International Organization for Standardization, whose purpose is to establish international standards for services, goods, and industrial methods;

jingle n. a short song or tune used in advertisements;

joint venture n. a business activity in which two or more companies have invested together;

kickback n. informal a bribe (=money that is paid secretly and dishonestly to obtain someone's help);

knowledge worker n. someone whose job involves dealing with information, rather than making things;

labour union n. AmE an organization representing people working in a particular industry or profession, especially in meetings with their employers. Labour unions are called trade unions in British English;

laisser-faire also laissez-faire n. the idea that governments should do as little to the economy as possible and allow private business to develop without the state controlling or influencing them;

land n. the earth's surface extending downward to the centre of the earth and upward to infinity, including those things permanently attached by nature, such as trees and water;

launch¹ v. 1 to show or make a new product available for sale for the first time 2 to start a new company 3 to start a new activity, usually after planning it carefully;

launch² n. 1 an occasion at which a new product is shown or made available for sale or use for the first time 2 the start of a new activity or plan;

leadership n. 1 the position or function of a leader 2 the period during which a person occupies the position of leader during her leadership very little was achieved 3 the ability to lead 4 the leaders as a group of a party, union, etc;

lease n. a legal agreement by which money is paid in order to use land, a building, etc for an agreed period of time;

lessee n. someone who is legally allowed to use a house, building, land for a fixed period of time in return for payment to the owner;

lessor n. someone who allows someone else to use their house, building, land for a period of time for payment;

letter of credit (l/c) n. plural letters of credit in foreign trade, a written promise by an importer's bank to pay the exporter's bank on a particular date or after a particular event, for example when the goods are sent by the exporter;

level n. 1 the measured amount of something that exists at a particular time or in a particular place 2 all the people or jobs within an organization, industry etc that have similar importance and responsibility;

level off/out phr. v. to stop climbing or growing and become steady or continue at a fixed level;

liability n. 1 [singular] an amount of money owed by a business to a supplier, lender, or other creditor 2 liabilities [plural] the amounts of money owed by a business considered together, as shown in its balance sheet 3 a person's or organization's responsibility for loss, damage, or injury caused to others or their property, or for payment of debts;

liberalize also -ise BrE v. to make a system, laws, or moral attitudes less strict – liberalization n.

limited company also limited liability company n. a company where individual shareholders lose only the cost of their shares if the company goes bankrupt, and not other property they own;

line organization n. an internal business structure in which every employee is a member of a direct chain of command from the top executives down through the levels of management;

line-and-staff organization n. an internal business structure in which the staff specialists perform technical services and provide expert guidance to line managers.

listing agreement n. a contract of employment that establishes the rights of the broker as an agent of a principal;

logo n. plural logos a design or way of writing its name that a company or organization uses as its official sign on its products, advertising etc;

loophole n. a small mistake in a law that makes it possible to do something the law is supposed to prevent you from doing, or to avoid doing something that the law is supposed to make you do;

lose v. 1 to stop having something any more, or to have less of it 2 to have less money than you had before or to spend more money than you are receiving 3 to fall to a lower figure or price;

lose something (to smb/sth) to have something such as a contract or customers taken away by someone or something;

lose ground to become less in value or to lose an advantage;

loss n. 1 the fact of no longer having something that you used to have 2 when a business or part of a business spends more money in costs than it gets in sales in a particular period, or loses money on a particular deal, problem etc;

loyal adj. if customers are loyal to a particular product, they continue to buy it and do not change to other products – loyalty n.

manage v. to keep smb/smth under control;

management n. the act of conducting, skilful employment of a business;

managerial adj. connected with the work of a manager;

margin also profit margin n. the difference between the price of a product or service and the cost of producing it, or between the cost of producing all of a company's products or services and the total sum they are sold for;

market challenger n. an organization or product that may take the place of the organization or product that has the highest sales in its market or industry;

market leader n. an organization or product that has the highest sales, or one of the highest sales, in its market or industry;

market nicher n. a product or service sold in a niche market (=a market for a product or service, perhaps an expensive or unusual one, that does not have many buyers) or the company that sells it;

marketing mix n. [usually singular] the combination of marketing actions often referred to as product, price, place, and promotion: selling the right product, through appropriate distribution channels, at the right price in relation to other products and for the profitability of the company, with the correct support in terms of advertising, sales force etc;

matrix organization n. an internal business structure which allows a project manager to exercise temporary authority over a number of specialists who also must report to different line managers for supervision in their specialties;

merchandise n. goods that are produced in order to be sold, especially goods that are sold in a store;

merge v. if two or more companies, organizations etc merge, or if they are merged, they join together;

merger n. an occasion when two or more companies, organizations etc join together to form a larger company etc;

middleman n. plural middlemen a person, business, organization etc that buys things in order to sell them to someone else, or that helps to arrange business deals for other people;

mission n. a specific task or duty assigned to a person or group of people;

mission statement n. a short written statement made by an organization, intended to communicate its aims to customers, employees, shareholders etc;

model n. 1 a particular type or design of a vehicle or machine 2 a simple description or structure that is used to help people understand similar systems or structures 3 the way in which something is done by a particular country, person etc that can be copied by others who want similar results;

monitor sth v. to carefully watch or measure something to see how it changes over a period of time;

morale n. the level of confidence and positive feelings among a group of people who work together;

motivate v. 1 to encourage someone and make them want to achieve something and be willing to work hard in order to do it 2 to provide the reason why someone does something – motivating adj.

motivated adj. very keen to do something or achieve something, especially because you find it interesting or exciting;

motivation n. 1 eagerness and willingness to do something without needing to be told or forced to do it 2 the reason why you want to do something;

motivator = incentive n. smth which is used to encourage people, esp. to make them work harder;

multiple adj. many in number, involving many different people or things;

nepotism n. the practice of giving jobs to members of your family when you are in a position of power;

niche market n. a market for a product or service, perhaps an expensive or unusual one that does not have many buyers but that may be profitable for companies who sell it;

objective n. sth that you are trying to achieve;

open-plan office n. open-plan offices do not have walls dividing them into separate rooms;

operate v. work, act, be in action;

operating n. carrying on a business;

optimize also -ise BrE v. to make the best possible use of something or to do something in the best possible way;

organization also –sation BrEn. all the people, their roles, and relationships, that make up the human resources of an enterprise;

organize v. put into working order, arrange the separate parts so they could work together;

organizing n. the deployment of organizational resources to achieve strategic objectives;

overdraft n. an arrangement with your bank that allows you to spend more money than you have in your account;

overtime n. 1 time that you spend working in your job in addition to your normal working hours 2 time that a factory, office etc is operating in addition to its normal hours 3 the money that you are paid for working more hours than usual;

ownership n. legal right of possession;

participative management n. a highly motivating style of management which stresses the active participation of employees in the management process;

partner n. 1 a company that works with another company in a particular activity, or invests in the same activity someone who starts a new business with someone else by investing in it rank in a company or organization 2 a member of certain types of business or professional groups, for example partnerships of lawyers, architects etc 3 also economic partner a country that invests in another or is invested in by another, or that trades with another 4 also trade partner, trading partner one country that trades with another;

partnership n. 1 a relationship between two people, organizations, or countries that work together 2 the situation of working together in business 3 a business organization made up of a group of accountants, lawyers etc who work together, or of a group of investors;

party n. one of the people or groups of people involved in an official arrangement;

patent¹ n. an legal document giving a person or company the right to make or sell a new invention, product, or method of doing something and stating that no other person or company is allowed to do this;

patent² v. to obtain a patent, protecting the rights to make or sell a new invention, product, or method of doing something patented adj [only before a noun];

peak¹ n. the time when prices, shares etc have reached their highest point or level

peak² adj. l peak level/price/rate etc the highest level, etc something reaches 2 peak time/period/hours/season the time etc when the greatest number of people are doing the same thing, using the same service etc;

peak³ v. to reach the highest point or level;

penny-pinching adj. not liking to spend money;

perform v. to do sth, such as a piece of work, task or duty;

persistence n. determined to do sth despite difficulty, especially when other people are against you are being annoying or unreasonable;

perspective n. 1 a way of regarding situations, facts, etc., and judging their relative importance 2 the proper or accurate point of view or the ability to see it; objectivity;

pioneer n. the first person or organization to do something that other people and organizations will later develop or continue to do – pioneer v., pioneering adj.

plan n. a drawing or representation of anything, a method, considered beforehand, for carrying out a piece of work;

planning n. making of plans, laying down of economic goals;

plummet v. to suddenly and quickly go down in value or amount –plummet n.

point-of-sale advertising n. advertising for a product in places where it is sold

possess v. to have or own smth

possession n. the act of having and controlling property;

prime time n. the time in the evening when most people are watching television, and the cost of advertising is at its most expensive;

principal n. the person who employs the broker;

process n. in business, the transformation of some sort of resource into an end product, thereby increasing the value of the original material;

product portfolio n. all of a company's products considered as a group;

production n. the manufacture of physical materials or goods;

productivity n. the amount of goods or services produced from a given amount of resources;

proficiency n. the ability to do sth well because of training and practice;

profit n. the amount of money left from income made by selling goods and services after all the costs of producing the goods and services have been paid for;

promotion n. l a move to a more important job or rank in a company or organisation – 2 also sales promotion an activity such as special advertisements or free gifts intended to sell a product or service;

property management n. management of real estate for another person for compensation; duties include collecting rents, maintaining the property, and keeping up all accounting;

property n. something or a number of things owned by someone, esp. buildings and land;

protectionism n the idea that a government should try to help an industry in its country by taxing foreign goods that compete with it, limiting the number that can be imported etc, and the actions that it takes to do this – protectionist adj., protectionist n.;

prototype n. the first form that a new design of a car, machine etc has;

public limited company (PLC) n. a limited company whose shares are freely sold and traded, in Britain public limited companies have the letters PLC after their name;

purpose n. the thing that smth is supposed to achieve;

qualification n. 1 [usually plural] an examination that you have passed at school, university, or in your profession 2 a skill, personal quality, or type of experience that makes you suitable for a particular job;

quality circle n. a small group of employees who meet regularly to discuss ways to improve working methods and to solve problems;

quantitative adj. connected with an amount or a number;

quota n. an official limit on the number or amount of something that is allowed in a particular period;

R and D n. research and development; the part of a business concerned with studying new ideas and developing new products;

rational adj. based on reason rather than emotions;

rationalize also -ise BrE v. to make a business or organization more effective by getting rid of unnecessary staff, equipment etc, or reorganizing its structure – rationalization n.

real estate¹ n. AmE land or buildings and the business of buying and selling them;

real estate ² n. the earth's surface extending downward to the centre of the earth and upward into space, including all things permanently attached to it by nature or by people;

real property n. the earth's surface extending downward to the centre of the earth and upward into space, including all things permanently attached to it by nature or man, as well as the interests, benefits, and rights inherent in its ownership;

recall v. 1 if a company recalls one of its products, it asks customers to return it because there may be something wrong with it – recall n. 2 to remember something that you have seen or heard, such as an advertisement – recall n.

receipt n. 1 the act of receiving something 2 a document given by someone, showing that they have received money, goods, or services 3 receipts [plural] money that has been received;

recession n. a period of time when an economy or industry is doing badly, and business activity and employment decrease. Many economists consider that there is a recession when industrial production falls for six months in a row;

recover v. 1 to increase or improve after falling in value or getting worse 2 to get back money that you have spent or lost 3 to get back something that was stolen, lost, or almost destroyed;

recovery n. plural recoveries 1 when prices increase, or when the economy grows again after a period of difficulty 2 the act of getting something back, such as money that you are owed;

recruit¹ v. to find new people to work for an organization, do a job etc;

recruit² n. someone who has recently joined a company or organization;

recruitment n. 1 the process or the business of recruiting new people 2 an occasion when someone is recruited;

redundancy n. plural redundancies especially BrE 1 when someone loses their job in a company because the job is no longer needed 2 [usually plural] a person who has lost their job in a company because the job is no longer needed;

redundant adj. especially BrE if you are redundant or made redundant, your employer no longer has a job for you;

reference n. 1 a letter written by someone who knows you well, usually to a new employer, giving information about your character, abilities, or qualifications 2 a person who provides information about your character, abilities, or qualifications when you are trying to get a job;

reliable adj. someone or something that is reliable can be trusted or depended on – reliability n.;

relocate v. if a company or workers relocate or are relocated, they move to a different place – relocation n.;

rent n. a fixed amount of money paid or received regularly for the use of a room, house, etc. that is owned by someone else;

require v. to need smth; to depend on smb/smth;

resign v. to officially leave a job, position etc usually through your own choice, rather than being told to leave – resignation n.

resource n. 1 [usually plural] also natural resource something such as oil, land, or natural energy that exists in a country and can be used to increase its wealth 2 resources [plural] all the money, property, skill, labour etc that a company has available;

restriction n. an official rule that limits or controls what people can do or what is allowed to happen;

retail outlet n. a shop through which products are sold to the public;

retailer n. 1 a business that sells goods to members of the public, rather than to shops etc 2 someone who owns or runs a shop selling goods to members of the public;

rise¹ v. to increase in number, amount, or value;

rise² n. 1 an increase in number, amount, or value 2 BrE an increase in salary or wages. A rise is called a raise in American English 3 [singular] the process of becoming more important, successful, or powerful;

rocket also rocket up v. if a price or amount rockets or rockets up, it increases quickly and suddenly;

sample¹ n. 1 a group of people who have been chosen to give opinions or information about something 2 a small amount of a product that people can try in order to find out what it is like;

sample² v. 1 to ask questions to a group of people chosen from a larger group, in order to get information or opinions from them, so as to better understand the larger group 2 to try a small amount of a product in order to find out what it is like;

scarce adj. not enough of smth available;

scenario n. 1 a summary of the plot of a play, etc., including information about its characters, scenes, etc 2 a predicted sequence of events;

security n. plural securities 1 actions to keep someone or something safe from being damaged, stolen etc 2 a feeling of being safe and free from worry about what might happen 3 property or other assets that you promise to give someone if you cannot pay back the money that you owe them 4 a financial investment such as a bond or share, or the related certificate showing who owns it;

segment¹ n. 1 a part of the economy of a country or a company's work 2 also market segment a group of customers that share similar characteristics, such as age, income, interests, social class etc 3 also market segment the products in a particular part of the market;

segment² v. to divide a large group of people into smaller groups of people of a similar age or with similar incomes, interests etc. Companies segment markets so as to be able to sell to each group the products that are most suitable for it – segmentation n.

sell-off n. when a business, company etc, or part of one, is sold to another company

set up v. to start a company or organization [ = establish];

share capital n. capital in the form of shares, rather than in the form of loans;

share n. one of the parts into which ownership of a company is divided;

shareholder n. someone who owns shares in a company;

skill n. an ability to do something well, especially because you have learned and practised it;

skilled adj. having enough ability, experience or knowledge to be able to do sth well

sleaze n. immoral behaviour, especially involving money or sex ‒ sleazy adj.

sleeping partner n. a partner who invests in a business but does not take an active part in managing it;

slot n. a particular time when a television programme or advertisement is shown;

slush fund n. [usually singular] an amount of money collected for illegal purposes, especially by a politician;

sole trader n. a legal form of company in some countries for someone who has their own business, with no other shareholders;

specialty n. an area of work that somebody gives most of their attention and knows a lot about;

speculate v. 1 to buy goods, shares, property etc in the hope that their value will increase so that you can sell them at a higher price and make a profit, often quickly 2 to think or talk about the possible causes or effects of something without knowing all the facts or details speculation n.

speculative adj. 1 bought or done in the hope of making a profit 2 based on guessing, not on information or facts;

stabilize also -ise BrE v. to become firm, steady, or unchanging, or to make something do this;

stake n. [usually singular] money risked or invested in a business;

stand v.

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