IGCSE COMMERCE PAPER 2 DEFINITIONS

Deposit account

a bank account used to store money on which interest is paid

Current account

a cheque account used to handle payments and receipt for account holders

advice note

a document from a supplier saying when goods are to be delivered

order

a document requesting specific goods to be delivered

cheques

a document that instructs the bank to transfer funds from one bank account to another

bank statement

a document that shows the bank transactions made by an account holder during the month

Debit note

a document used to inform a customer that they have been undercharged stating the amount outstanding and the reason for the undercharging

consul

a group of representatives from your country that are able to assist of those who are from your country and have problems while travelling overseas

Enquiry

a letter sent to a supplier to find out what the supplier has to offer

agenda

a list of topics that will be discussed at a meeting

debenture

a loan to a company that pays a fixed rate per annum for a fixed period of time

unsecured loan

a loan which is not supported by collateral

Documentary credit

a method used by exporters and importers to make international trade payments

bookkeeper

a person responsible for keeping records of business transactions

independent

a relatively small retailer who often operates as a sole trader

quotation

a response to a letter of enquiry from a supplier quoting the price and other details of the goods that the supplier is able to offer

inflation

a rise in the general price level

preference shares

a share usually with no voting rights which entitles the holder to a fixed dividend whose payments take priority over that of ordinary share dividends

lease

a source of finance used to acquire land, property, machinery and equipment

finance house

a specialist financial institution that provides funds for HP agreements

Direct debit mandate

a written instruction used to authorise a payment from the payer's bank account

minutes

a written record of what was discussed and decided in a meeting

overseas agent

acts on behalf of exporters in foreign markets by introducing them to customers and helping them to facilitate international trade transactions

holdings

amount of something that a person has

average inventory

an average of opening inventory and closing inventory

Direct debit

an electronic method of transferring money from one bank account to another when requested by the creditor

business angel

an entrepreneurial individual who provides a business with some capital in return of a stake

postal order

an order for the payment of a specified sum to a named payee, issued by the post office

post office

an organisation responsible for postal services and telecommunication and financial services

below the line promotion

any other promotion that does not include using the media

capital accounts

apart of the balance of payments that records transactions relating to savings and investments

savings account

bank account into which account holders pay a regular amount each month to build up savings

overdraft

borrowing arrangement where current account holder is allowed to spend more money than there is in the account up to an agreed limit

stockpiling

building up of inventories over period of time in preparation for sharp increase in demand

expenses as a percentage of turnover

business overheads as a percentage of sales turnover

hire purchase

buying specific goods with a loan often provided by financial institution like a bank

Debit card

card used to make ATM withdrawals and transfer money from the user's bank account to another

auditing

checking whether if the transactions are accurate

consolidation (of debt)

combining a number of liabilities, loans and debts into one single loan

warehouse club

commercial enterprise that operates as a wholesaler selling goods in bulk at discounted prices to business and private customers who must first become club members

cost of sales

direct costs and direct labour or the costs of inventory for resale

bank draft

document like cheque but drawn on the bank's funds and not from the drawer's

statement of account

document sent to customers showing a summary of recent transactions and total amount outstanding

E newsletters

documents sent to customers electronically which can contain a range of contents

liquidity

ease in which an asset can be converted into cash

standing order

electronic method of transferring money from one bank account to another which is controlled by the account holder

marketing mix

elements of a firm's marketing that are designed to meet the needs of customers

projected

estimated the size of something in the future based on what is happening now

Horizontal communication

exchange of information between colleagues on the same level of importance in an organisation

external finance

finance obtained from outside the business

issuing houses

financial institution that arranges issuing of new shares on the stock exchange

gross profit margin

gross profit expressed as a percentage of sales turnover

World Trade Organisation

international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers

institutional investor

large organisation such as insurance company that invest large amounts of money in shares and other financial instruments

shelf life

length of time that a product can be made available for purchase

Store cards

like credit cards but issued by large stores and chains

Secured loan

loan that is supported by collateral

mortgage

long term loan secured with property

monetary policy

measures designed to control the money supply in a country

long term finance

money borrowed for more than one year

short term finance

money borrowed for one year or less

venture capital

money provided by specialist investors or individuals for business purposes

revenue

money received by businesses from selling products

Surplus

more of something that is needed

Diversification

moving into the supply of different and unrelated products

profit for the year (net profit) margin

net profit expressed as a percentage of sales turnover

return on capital employed

net profit of a business as percentage of the amount of money used to generate it

goods received note

normally a copy of the delivery note that has been signed by the customer to confirm that the correct goods have been delivered

upward communication

passing messages from the bottom of organisation put who's at the top

Downward communication

passing messages from the top of the organisation to those at the bottom

subsidise

paying part of the cost (often by government in business)

retained profit

profit that is kept by business for future use

stake

proportion of company owned by shareholder

credit guarantee

provides the business with protection against financial losses

channels of communication

routes along which information might travel in a business

night safe

safe that is accessed through a hole in the wall of a bank

communication

sending and receiving of messages

phishing

sending emails illegally pretending to be from trusted companies in order to track individuals into disclosing personal information

ordinary share

share that are entitled to its holders to variable dividends and are given the right to vote

performance indicators

sign that shows how well something is performed

merchant bank

specialist bank that conducts underwriting , loan service for very large corporations and very wealthy individuals

barter system

system of exchange where goods are swapped with other goods

bank giro credit

system of payment that allows a payer to pay money directly to a payee's account

customs and excise duties

taxes on import

viral advertising

technique used by businesses to encourage internet users to forward its publicity material in emails or via social media

Drawee

the bank that provides the cash in a cheque payment

logistics

the commercial activity of transporting goods in the chain of distribution

advertising

the communication of businesses and its customers where images are shared in the media to encourage the purchase of products

finance cost

the cost of borrowing

delivery note

the document that describes the goods that have been delivered by the supplier

capital employed

the money invested in a business

trade liberalisation

the move towards greater free trade through removal of trade barriers

inventory turnover

the number of times in a period that average inventory is sold

Drawer

the person or business making a payment by cheque

payee

the person or business receiving payment by cheque

capital gain

the profit gained from a sale of an asset

Credit transaction

the transaction where goods are sold but payment is received at a later date

Proposer of the legislative agenda

those who want to buy insurance cover

Suez Canal

to make a legal claim against someone (usually money) because they have harmed you in some way

issue

to officially give something

profit for the year (net profit)

total sales revenue less cost of sales and expenses

gross profit

total sales revenue less the cost of sales

cheque crossing

two parallel, vertical lines drawn across the face of the cheque to indicate the payment to be directed to the bank account

above the line promotion

using the media to share adverts

bonding warehouse

warehouse used to store imports in order to delay payments of customs and excise duties

Endorsed

where a check is signed on the back to make it payable to someone other than the stated payee or to accept responsibility for paying it

Crowdfunding

where a large number of individuals invest in a business venture using an online platform and therefore avoiding a bank

informal credit

where a vendor allows customers to buy goods and pay for them at the end of the week or month

seasonal production

where all the output from production is realised at a particular time of the year

restructuring (of debt)

where business is allowed to renegotiate the terms and conditions of its loans and other liabilities

green marketing

where businesses emphasise how environmentally friendly their products and practises are

trade credit

where buyers are given a period of time before they have to pay for goods purchased

insurance

where company provides a guarantee of compensation for specified loss suffered by business or individual in return for the payment of the specified premium

seasonal demand

where demand for a particular product occurs at particular times of the year

containerisation

where goods are carried in a standardised metal container

Credit sale

where goods are sold and payment is received in installments over a period of time

legal tender

where means of payment must be accepted by law

Initial Public Offering (IPO)

where shares in a public limited company are sold and traded on the stock market for the very first time

affiliate marketing

where the online retailer gives commision to the external website for traffic or sales generated from its referrals

subordinate

workers who are in a less important position than someone else

fundamental value

worth of a company based on proper financial analysis and future potential of its products