Financial
Terminology for Drawing and
Disbursing Officers and Financial Executives (Part-2)
-Dr.Lalit
Kumar Setia*
Face Value
The
nominal value of stocks, shares, bonds, certificate etc. This value
excludes premium or discount.
Fictitious Assets
Those
assets which appear in the balance sheet but do not represent value that can be
realized e.g. Preliminary expenses not written off. They arise out of
genuine transactions.
Final Accounts
The
set of financial statements produced in the form of Profit and Loss Account and
Balance Sheet at the end of the Accounting period.
Finance
The
raising or providing of money for public or commercial undertakings.
Financial Accounting
The
systematic recording in monetary terms of information about a firm, primarily
for creditors, shareholders and taxation authorities. It is the giving or
presenting of final results in the form of Profit and Loss account and Balance
Sheet of the firm.
Financial Management
A
subject that covers the managerial aspect of funds in the sense of resources
and disbursements. It includes decision making processes on how best to
utilize available funds; how to cut costs and increase revenues.
Financial Ratios
A
ratio used to analyse the performance of an organization by finding a
relationship between two items of accounts.
First In First Out (FIFO)
The
stock which is acquired earliest is assumed to be used first, the stock
acquired latest is assumed to be still on hand. A method of pricing materials
which has the effect of charging less to profit and loss account and higher
valuation in the balance sheet than other methods of stock pricing.
Fiscal Year
A
period covered by the Budget, as used in the United States. A period of twelve
consecutive months used as an accounting period.
Fixed Assets
Assets
which have long term use such as furniture, machinery, building etc. and which
are acquired to assist the production process and are not used for trading i.e.
to make a profit by reselling them.
Fixed Cost
A
cost which for a given period of time and range of activity called the relevant
range does not change in total but becomes progressively smaller on a per unit
basis as volume increases.
Flexible Budget
A
budget that provides budgeted amounts for all levels of production within the
relevant range-a budget which can be automatically geared to change in the
levels of volume or output.
Freehold
An
ownership of land where the owner or holder of the land has free and absolute
possession for all times to come without any encumbrances.
Free Trade
International
trade without tariffs, quotas or other artificial restrictions.
Fund
Sum
of Money. Income set aside for a particular purpose. Stock or
capital. Government stock and public securities.
Futures
A
means by which merchants or other large buyers could hedge against price
fluctuations of a commodity in which they deal.
Gain
A
profit which is earned as a result of some activity other than from a regular
business or trade.
Goodwill
The
total purchase price of assets acquired in lump-sum purchase that exceeds the
total of the amounts that can be justifiably assigned to the individual
assets. Intangible assets of a firm established by the excess of the
price paid for the going concern over its book value.
A
benefit of an established firm over new firms in terms of the likelihood of
repeat business from its customers.
Value
of a business in excess of the realizable value of its tangible assets.
It can arise when consolidated accounts are prepared and there is a surplus of
the purchase price of share capital in the subsidiary company above their
underlying net asset value.
Government Securities
Securities
issued by the Government which may be short-term, medium-term or
long-term. They are usually issued in the form of bonds or treasury
bills. They are also termed as funded stocks. Government stocks are
known as gilt-edged by the British Government.
Income
Gain,
interest or revenue resulting from employment, business activity etc.
Incentives
A
system of wage payment which offers an inducement in the form of a bonus to
encourage workers to maintain a high level of output.
*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.
