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The finance industry speaks its own language. To help you better understand these words, we created a glossary of terms.
Authorization, authentication, and accounting; protocol for authenticating a user based on their verifiable identity, authorizing a user based on their use rights, and accounting for a user's consumption of network resources.
Aba Routing Number
Transit Routing Number; directs electronic ACH deposits to the right bank institution.
Amount of inventory of a specific commercial property that become occupied during a particular period of time in a given market reported as the absorption rate.
Accelerated Depreciation
refers to multiple methods by which a company lowers the value of an asset in earlier rather than later years. This action permits the company earlier capital recovery and a more expedited tax write off of said asset.
Acceptance For Settlement
The payment processing stage when it has passed risk management and any other test and can be settled under systemic procedures and rules.
Service or trading establishment that accepts on its own.
The opportunity or right of an institution to use services.
Access Card
Plastic card provided by a financial institution used in an automated teller machine to complete deposits, withdraw cash, account transfers and other related account functions.
Access Control
Mechanisms that limit information availability or information processing resources only to applications or authorized persons.
Access Fees
Fees with using a secure server to approve and process transactions. A credit card merchant account can also be charged gateway processing fees separately or as part of a monthly processing fee.
Access Products
Instruments of payment that permit customers access to their deposit accounts and to also transfer deposits; for example, home banking facilities and point of sale electronic fund transfers.
Specific asset, liability, owner's equity, expense or revenue's detailed record. Method to classify, recor, and accumulate transactions from which a balance sheet and income statement can be derived. An account is typically expressed in money. A separate account exists for each category of liability and asset, expense, revenue and shareholder equity.
Account Data
Account data consists of cardholder data plus sensitive authentication data.
Account Funding Transaction
Term used by Visa to denote an electronic commerce purchase for the purpose of adding funds to a Visa prepaid account that is posted to a Visa card and includes the transmission of the account funding transfer indicator.
Account History
Transaction and payment history of an account over a particular period of time including the number of times the account has been past due or over the credit limit.
Account Number Truncation
The process of not printing the full primary account number and expiration date on a receipt; most often, only the last four digits on the primary account number are made visible.
Keeping record of money transactions that are electronic.
Process of communicating, interpreting, measuring and recording financial date for decision making.
Accounting Period
Time covered by financial statements, most often a year, quarter or month. The annual accounting period for financial statements may be based on a fiscal or calendar year. Accounting policies
Accounting Standards
Accounting principles after being established by an authoritative accounting rule making body.
Accounting System
total structur of procedures and rcords that identify, classify, and report information on operations and financial positions of governmental units or any of its account groups, organisations components or funds.
Accounts Payable
Amounts due others for services or goods purchased; usually payable within 12 months from report date and classified as current liabilities on the balance sheet.
Accounts Receivable
Amounts due from others for services and goods delivered in the regular course of business. Amounts due within 12 months of the report date conform to the definition of current assets. Any amounts known to be uncollectible within one year but collectible after one year should be separtately listed as a line entry under non-current assets.
Accounts Receivable Turnover
Measurements determined by dividing annual net sales by the average accounts receivable. For an entity with a decreasing turnover rate, the longer receivables are kept the less likely they are to be collected.
Growth in assets through internal expansion, acquisitions, or mergers. Adjustment of the difference between the price of the bound and the face value bought at an original discount.
An accounting method wherein revenues are recorded as well as expenses when then occur, regardless of the exchange of cash.
Accrual Accounting
Method of accounting that recognizes transactions and other events when they occur; not as cash or its equivalent is paid or issued. The events are recorded in the accounting periods and reported in the financial statements of the periods they relate to.
Accrued Expense
Incurred expenditures in the current accounting period not involced or paid by the end of the period; usually payable within 12 months.
Accrued Interest
Amount of interest accumulated on a bond since the last interest payment and in the sale of a bond, the interest accrued up to but not including date of delivery or settlement date. See interest.
Accrued Liability
Incurred liabilities for which payment has not been made during a given accounting period; for example, in a manufacturing environment, vendors, suppliers, taxes, wages, etc.
Accrued Revenue
Earned revenue that has to be accounted for but hasn't been received by the end of the reporting period.
Accumulated Cost Recovery
Total cost recovery deductions taken over the course of the holding period of a property.
Accumulated Depreciation
Cumulative charges against company fixed assets for obsolescence or wear and tear.
Acid Test Ratio
Stringent test of liquidity or quick ratio. The ratio is determined by dividing the most liquid current assets of cash, accounts receivable or marketable securities by current liabilites.
An entity or entities that maintain deposit accounts for merchants or card acceptors and the card acceptor has the ability to transmit the date relating to the transaction. The responsibility for transaction collection information and settlement is that of the acquirer.
Acquirers Association
A nonprofit, regional and independent organization that provides education, training and networking opportunities for professionals working in the acquiring side of the bankcard industry including ISOs, MLSs, financial institutions, equipment vendors and providers of value added services.
Acquiring Bank
Bank that provides e-businesses with a credit card merchant account. The acquiring bank transfers credit card information to a credit card association and in return, forward it onto an issuing bank.
Acquiring Bank (merchant Bank)
Bank that is authorized member of MasterCard and Visa that is in the business of processing credit card transactions on behalf of merchants.
Acquiring Bank/merchant Bank
Bank that does business with merchants who accept credit cards.
Acquiring Financial Institution
Acquiring financial institution contracts with the bank and merchants to allow credit card transactions; the acquirer deposits the daily credit card totals and debits, as well as the end of month processing fees from merchant accounts.
Acquiring Processor
Processor provides credit card billing, reporting, purchasing, and settlement and operational services to acquiring and issuing banks.
Acquiring Technical Operator
The provision of technical facilities by a party for each acquiring entity to accept transaction data.
A corporate action in which a company purchases assets of a company or the company itself. Although similar to a merger, which is often regarded as friendly, equitable corporate exchange, acquisition is more in keeping with the outright securing of shares.
Acquisition Cost
Price to buy goods, assets or services that equals the list price plus normal incidental costs to secure the item such as preparation, taxes, installation and transportation.
Acquisition Fee
Fee charged by a lessor to start a lease. An acquisition is referred to as an initiation fee or bank fee if the lessor is a bank instead of a dealer. Acquisition fees start at approximately $300 and are rarely negotiable.
Acrs: Accelerated Cost Recovery System
The expedited depreciation method utilized under the US system of tax law. Accelerated cost recovery system delineates rules for depreciating various forms of assets using variants of double decreasing balance depreciation.
Legal proceeding where one enforces or demands one's rights in court.
Active Income
Income from wages, tips, salary and activities the taxpayer materially participates in.
Ad Valorem
Latin for according to the value; for example, the property tax is an Ad Vaolren tax as it is based on the fair and full cash value (FFCV) of the personal or real property. See assessed value.
Add Value
Fourth stage of a four stage transaction management process pertaining to a transaction managers planning and continual contact with key decision makers as well as contact with ancilary professionals.
Add-on Factor
Ratio of rentable to useable square feet.
Additional Assistance
State aid program that provides general unrestricted fund revenue to a specific numver of communities through the Cherry Street. Additional Assistance was created from the old resolution aid formula in the 1980's.
Additional Paid-in Capital
Excess received from stockholders over stock par value issued. Referred to as contributed capital in excess of par. Additional paid in capital is reflected in the shareholder equity section of the balance sheet.
Address Verification
Service provided by which the merchant verifies cardholder address; primarily used by telephone and mail order merchants. No guarantee the transaction is valid.
Address Verification Service
Process of validating a cardholder's provided address against issuer's records to determine accuracy and deter fraud. The service is provided as part of a credit card authorization for telephone or mail order transactions. A code is returned with the authorization resulting in the indication of accuracy of the address match and helps secure the most favorable interchange rates.
Address Verification System (avs)
Determines whether the billing address provided by the customer matches the credit card. If AVS is opted out of, Visa and Mastercard will not support transactions and will assess an additional 1.25% on sales.
Adjusted Basis
Origin bost basis of property plus capital improvements less total accumulated cost recovery deductions and partial sales taken in the holding period.
Adjusted Capitalized Cost
Final amount on which lease payments are calculated. The figure arrived at by deducting the capitalized cost reduction from the gross capitalized cost.
Acquirer to correct a processing error initiates an adjustment. The error could be a duplication of a transaction or the result of cardholder dispute. The acquirer credits or debits the merchant DDA account for the dollar amount of the adjustment.
Advance Refunding
Debt issued to refinance existing debt where the proceeds are received by the school district more than 90 days prior to the date the existing bonds will retire. These proceeds are placed in trust and invested until they are utilized to pay off the existing debt. These transactions are frequently completed to save money by refinancing at lower interest rates or to restructure the payment streams of existing issue to more favorable terms.
Advance Rental Payments
Payments made from lessee to lessor at the beginning of the lease transaction; typically first and last months rent.
Adverse Audit Opinion
Auditor's opinion that accompanies a financial statement when the auditor determines that qualification of the report is insufficient to disclose incomplete or misleading nature of the financial statements.
Malicious software when installed, forces a computer to automatically download or display advertisements.
Advanced Encryption Standard. Blockk cipher used in symmetric key cryptography adopted by NIST in November 2001 as US FIPS PUB 197.
Licensee or member of Visa International, Visa USA or an organization associated with Mastercard member that contributes under the rule or card plan on eith the merchant or cardholder side.
Affinity Card
Card offered jointly by two organizations. Once is a professional association and one is a credit card holder, special interest group or other non-bank entity; for example, American Airlines and citibank sponsor the citibank Aadvantage card.
Affinity Partner
Individual with a relationship with an issuer for the issuance of affinity cards not eligible for membership with Visa or Mastercard.
Agency Debt Or Agency Security
Debt obligation or bond that is guaranteed or issued by a federal agency or government sponsored enterprise chartered by Congress and subject to close supervision by a US government entity but their debt is not back by the US government.
Agency Fund
One of four kinds of fiduciary funds used to report resources in a purely custodial capacity by a unit of the government. Agency funds typically involve only the temporary investment, receipt, and periodic money transfers to fulfill legal obligations.
Agency Relationship
A relationship established by contract with an agent or party on behalf of another party or principal. The agent has the ability to execute trades on behalf of the principal; however, is not responsible for principal performance.
Entity such as a custodian or fund manager that takes on security loans and negotiates terms with the borrower on behalf of a customer/owner.
Those who sell bankcard services to merchants on behalf of ISOs, processors and acquirers. (Green Sheet)
Agglomeration Economies
Savings or cost reduction from efficiency gains associated with clustering firms or economic activities and the formation of a localized production network.
Aggregate Days Of Membership
Total number of days students are actually enrolled for all studnets all days in sessnion during a reporting period.A student can be counted in membership even if not in attendance. However, the first and last days of enrollment for any student are determind by attendance.
Aging Of Receivables
Accounts receivable time analysis where they are classified as current or past due. If past due, they are cassed by due date.
Agreements among bank, processor and client contained in the application, the program guide and the schedules that document incorporated each as amended periodically that collectively constitutes the agreement among the parties.
Distribution or division in accordance with a preestablished plan.
Allowable Costs
Granting agency costs that meet certain criteria.
Provision for asset valuing at net, such as an allowance for bad debts. The allowance would be deducted from receivable accounts to reflect receivables that are likely to be collectable.
Alternative Minimum Tax (amt)
Introduced by the Tax Reform Act of 1969 as a system for taxing corporations and individuals that prevents taxpayers from otherwise reducing their tax below a particular level.
American Bankers Association
Nonprofit organization serving the banking industry since 1875; members include money center, regional and community banks and holding companies as well as trust companies, savings associations and savings banks.
American Depositary Receipt (adr)
US bank issued security in place of foreign shares held in trust by a bank, facilitating the trading of foreign shares in US markets.
American Express
A diversified worldwide financial, travel, and network services company originally founded in 1850. The company issues credit, charge and prepaid cards that support a variety of clients and the needs of businesses and consumers.
American Express (amex)
Company that issues cards and acquires transactions through merchants.
The systematic reduction of debt via routine or regular payments.
Gradual repayment of an obligation in accordance with a predetermined schedule of payment over time.
Annual Debt Service (ads)
Total amount of interest and principal to be paid yearly to satisfy oblifations of a loan contract.
Annual Fee
Yearly fee charged to the card for maintaining the account in an open status. Some cards have this fee.
Annual Percentage Rate (apr)
Cost of carrying a loan balance expressed as an annual percentage to calculate the amount owed in interest each month divide the APR by 12. For example, if the APR is 18% the monthly rate is 1.5%.
Annual Report
Formal financial statement issued annually by a corporation. The annual report shows revenues, expenses, assets, liabilities and earnings - how the company stood at the end of the business year, how it fared profit wise, and other information of interest to shareowners.
Equal periodic receipts or payments such as investment that upon maturing provides fixed payment anounts over a regular recurring period.
Annuity Style
Also known as mortgage style appraisal, a structured loan wherein payments of interest and principal are equal.
American National Standards Institute; private, non-profit organization that coordinates and administers the US voluntary standardization and conformity assessment system.
Software or program capable of removing, detecting, and protecting against a variety of malicious software including worms, viruses, spyware, adware and rootkits.
Lease application form used to secure credit information needed to evalute a prospective lessee's creditworthiness and history.
Application Only
One page application used to secure equipment based solely on credit score.
Allocation of federal or state aid, district taxes, or other moneys among LEAs or other government units.
Apportionment Notice
Document that notifies LEAs when moneys have been deposited with the country treasurer.
Appraisal Fee
Charge for estimating the value of property offered as security.
Appreciation Potential
Probability that a real estate investment will increase in value during the holding period.
Authorization granted by town meeting, or city council to other legislative bodies to incur obligations and expend money for specific public purposes. Appropriation is most often limited in amount and when it may be expended.
Appropriation Ledger
Subsidiary ledger containing accounts for each appropriation. Each account shows the original amount appropriated in the budget, expenditures, encumbered balances, budget increases or decreases during the year, and other related information.
When the same security commodity or currency is traded on more than one market, the profit that is derived from it.
Procedure an acquirer can use to resolve a complaint with a card issuer on behalf of the establishment.
Arm‰Ûªs Length Sale
Transfer of property ownership between a willing seller that is not under compulsion to seel and a buyer that is willing and not under compulsion to buy. The sale price is the amount of money or equivalent that would be determined through fair negotiation.
Rent that is overdue.
Asian Development Fund (adf)
Asian Development Fund (ADF)- ADB's 'concessional'or 'soft loan' window is funded by ADB's donor member countires. ADF loans carry very low interest rates and are for the poorest borrowing countries.
Assessed Valuation
Value assigned by government to real estate or other property as the foundation for levying taxes. In Massachusetts, assessed valuation is based on full and fair cash value deteremined by assessors. See Ad Valorem; Full and Fair Cash Value.
Assessed Value
Value of real property established by tax assessor for levying real estate taxes.
Assessment Date
Date liability for property is fixed. In Massachusetts, property taxes are assessed by the January 1 prior to the fiscal year. Assessors determine physical status of taxable personal and real property, ownership, fiar cash value as well as usage classification.
Assessment Ratio
Ratio of assessed to equalized valuation.
Fees paid to VISA and Mastercard for administrative and marketing costs. A percentage of the sales passed through interchange.
A good, whether physical or intangible, determined to have value that can be exchanged for goodwill, equipment, investments, receivables and/or cash.
Asset Turnover
Measurement of operational efficiency that indicates how much revenue is produced per assets that are available to the business (sales revenue, total assets less current liabilities).
Asset-backed Commercial Paper (abcp)
Reaching maturity or payable within an abbreviated time and secured by an asset that is fixed.
Asset-backed Commercial Paper Money Market Mutual Fund Liquidity Facility (amlf)
Special lending facility established by the Federal Reserve in 2008; established at the Boston Fed to assist money funds to meet demand for redemptions and to foster liquidity in the ABCP market and money markets in general. The AMLF was closed in 2010.
Asset-backed Security (abs)
Debt instrument collateralized by specific financial assets that create cash flow used to service the debt instrument; normally marketable and transferable to third parties in market transactions.
Asset-based Finance
Finances extended to a borrower, despite their creditworthiness, with particular attention paid to the value of the asset that is financed.
Everything owned by a corporation that is due to it: investments, cash, money due it, inventories and materials are referred to as current assets; buildings and machinery are known as fixed assets, goodwills and patents are referred to as intangible assets. See liabilities.
Transfer of property or rights from one person to another.
Association Rules
Entity formed to promote and administer cards including without limit Mastercard Interantional, Incorporated, Visa USA and Visa International.
Entity formed to promote and administer credit and cards.
Independent Professional Services designed to improve information context or quality. Such services are broad and could include assessment of a variety of industries.
Assured Payment System
An exchange for value system arrangement under which timely settlement of payment instructions are to be completed and supported by unconditional and irrevocable third party commitment; most probably a clearinghouse, bank, or syndication of banks.
Approval Scanning Vendor; company approved by the PCI SSC to conduct external vulnerability scanning services.
Asymmetric Cryptography
Crypotgraphic techniques wherein two varying keys, public or private, are utilized for decrypting and encrypting data. The holder of the private key keeps it a secret while the public key is accessible to communicating entities.
Association of Town Finance Committees.
See automated teller machine.
Atm Debit Card
Card issued to customers who secure a checking or savings account at a financial institution to allow access 24 hours a day, 7 days a week using the ATM.
Actually present for all students all days in session during a reporting period.
Auction Market
Securities trading system through agents or brokers on an exchange such as the New York Stock Exchange. Buyers compete with other buyers and sellers compete with other sellers for the best price.
Audio Response Unit (aru)
Electronic authorization and capture product where the merchant uses a touch tone phone to process various transactions.
Examination of community procedures, data, and financial systems by a certified public accountant, acting as an independent auditor; with a report on the fairness of financial statements on local compliance with regulations and statutes.
Audit Committee
Committee appointed by mayor, city council, or selectmen with specific responsibility to review the community's independent audit of financial statements and to address any issues relating to it, including those outlined in the management letter that is accepted.
Audit Finding
An instance of noncompliance with applicable regulations and laws or a weakness in internal controls that is presented in the audit report.
Audit Log
Chronological record of system activities; provides an independently verifiable trail sufficient to permit reconstruction review, and examination of sequence of environments and activities surrounding or leading to procedure, operation, or event in a transaction from inception to final results.
Audit Program
Detailed work outline completed and the procedures followed during an audit.
Audit Report
Indepdnent audit report that includes a statement of the scope of the audit, explanations as to the application of auditing procedures, opinions and findings, financial schedules and statements, statistical tables, supplemental comments and recommendation.
The possibility of establishment.
Auditing Standards
Regulated and stated practices following in auditing fiancial and other information. These regulations may be statutes or statements issued by the professional or regulatory bodies in the countries involved. International standards on auditing have been ussed by the International Auditors Practices Committee of the International Federation of Accountants.
Government agency, company, partnership or individual that conducts audits. The entity performs audits according to particular auditing standards.
Auditor's Report
Accountant's opinion, statement of the accounting firm's opinion of the corporation's financial statement or the firms work, particularly if they conform to generally accepted practices of accountancy.
Authentication Credentials
Combination of the user ID or account ID plus the authentication factor used to authenticate an individual, process or device.
Approval by or on behalf of the card issuer to validate a transaction for a merchant or other affiliate bank. An authorization indicates the availability of the cardholders credit limit at the time of request only.
Authorization Approval Code
Number issued to a participating merchant by the Authorization Center that confirms the authorization for a service or sale.
Authorization Center
Department that electronically communicates a merchants' request for authorization on credit card transaction to the cardholder's bank and transmits authorization to the merchant by way of voice authorization or electronic equipment.
Authorization Code
Code that a credit card issuing bank returns in an electronic to message to the merchant's POS equipment that indicates transaction approval. The code serves as proof of authorization.
Authorization Fee
Fee charged everytime by a transaction is sent to the card issuing bank to be authorized whether the request is approved or not.
Authorization Only Transaction
Transaction are created to reserve an amount against a credit card's available limit for intended puchases; an authorization only transaction intended for the merchant's protection to make sure the credit card has a limit high enough to allow a transaction.
Authorization Response
Issuing financial institution's electronic message reply to authorization request that can include: approval- transaction was approved; decline - transaction not approved; referred - response pending additional information. Merchant has to call the toll free authorization phone number.
Auto Close
Terminal feature that allows an end of day batch closeing to happen automatically at a particular time without the need to be initiated by the merchant.
Process where daily batches of transactions are automatically summarized and transmitted for end of day processing and settlement at a predetermined time.
Auto-representment Chargebacks
Credit not issued that are automatically resolved on the merchants behalf without their knowledge or intervention.
Automated Clearing House
An electronic clearing system wherein payment orders are exchanged within financial institutions via telecommunications networks or magnetic media, and then handled by data processing centres. See also clearance/clearing.
Automated Clearing House (ach)
Electronic payment network associated with payroll direct deposit and recurring apyments and used to settle merchant card accounts. Also the most common way North American Bancard collects and makes payments to and from our sales partners. Those who do not participate in the ACH option are paid by check and need to make alternative payment arrangements for funds due to North American Bancard.
Automated Clearing House (ach) File
File of instructions for the settlement and exchange of electronic payments passed between financial institutions; represents credits and debits to be deducted from an account automatically as they happen.
Automated Response Unit
Allows the manual keyed entry and authorization of credit card over a land or cellular phone.
Automated Teller Machine
An electromechanical device that allows users that are authorised, most often using machine-readable plastic cards, to take cash from their accounts and/or utilize other services such as transfer of funds, balance enquiries and/or accept deposits.
Automated Teller Machine (atm)
Unattended computer terminal that performs basic teller functions such as accepting deposits, dispensing cash, accepting loan paments and allowing a bank customer to order transfers among accounts and account inquiries.
Automatic Bill Payment
Arrangement between a service provider or merchant and a customer that allows recurring automatic charges for a service to an agreed upon debit or credit account.
Automatic Check Handling (ach)
Can also mean Automatic Clearinghouse; a form of electronic payment that can be trasnferred by wire or through an automatic clearing house. Wire transfer is an e-payment that is designed to handle high dollar, time sensitive payments. ACH is set up to be an e-check usually used to process higher volumes or small dollar payments for settlement within 1 to 2 business days. Settled pretty much the same way checks are settled.
Automatic Renewal Clause
Written lease provision that allows the lease to be automatically extended upon expiration of a term.
When requested by users, the ability of information and services to be accessed.
Available Cash
Cash on hand or deposit in a given fund that is unencumbered and can be used for meeting present obligations.
Available Funds
Balances in differenty fund types representing non-recurring revenue sources, that are frequently appropriated to meet unexpencted expenses, capital expenditures or other one time costs. Examples include enterprise net assets which are unrestricted.
Available Seat Kilometres (ask)
Available seats multiplied by the distance of the flight.
Average Annual Effective Rate
Average annual effective rent divided by square footage.
Average Annual Effective Rent
Tenants total effective rent divided by terms of the lease.
Average Daily Attendance (ada )
Total approved attendance days in the LEA divided by the number of days schools in the LEA are in session for at least the required minimum number of days.
Average Daily Attendance (ada)
Aggregate days of attendance during a specific reporting period, typically a school year, divided by the number of days school is in session during that period.
Average Daily Balance
Average daily balance used to calculate finance charges; calculated by adding the outstanding balance on each day in the billing period as well as dividing that total by the number of days ini the billing cycle. That calculation includes new payments and purchases.
Average Ticket
Average dollar amount of credit card transactions that the merchant brings in.
Average Ticket (average Sale)
Average dollar amount of a merchant's typical sales. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for a particular period of time.
Ways of measuring securities price trends, one of the most popular of which is the Dow Jones Industrial Average of 30 industrial stocks listed on the New York Stock Exchange. Prices of the 30 stocks are totaled and divided by a divisor, intended to compensate past stock splits and stock dividends that change from time to time. Point changes in the average have only the slightest relationship to dollar price changes in stocks included in the average.
Averaging Method
Simple technique used to forecast next year's vacancy rate by averaging previous years' vacancy rates.