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NEED INSTANT ONLINE FINANCIAL ANALYSIS? VENTURELINE IS THE WORLDWIDE LEADER FOR SEC TRACEABLE COMPANY & INDUSTRY ANALYSES ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARYOVER 3,000 ACCOUNTING TERMS The Web's Most Complete Accounting Dictionary-Accounting Glossary of Accounting Terms Download the Accounting Dictionary-Accounting Glossary of Accounting Terms
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M1 is the narrowest measure of the U.S. money supply; includes currency in circulation plus demand deposits (checking account balances). M2 is a measure of the U.S. money supply that includes M1, plus savings and small time deposits, overnight repos at commercial banks, and non- institutional money market accounts. M2 is a key economic indicator used to forecast inflation. M3 is the broadest measure of the U.S. money stock that consists of M2, time deposits of $100,000 or more at all depository institutions, term repurchase agreements in amounts of $100,000 or more, certain term Eurodollars and balances in money market mutual funds restricted to institutional investor. MACRS is Modified Accelerated Cost Recovery System. MAINTENANCE is the activity involved in maintaining something in good working order. May include replacement of signifcant portions of the item(s) being maintained. MAINTENANCE OF ACCOUNTS, in accounting, ensures that all transactions and accounting records are in accordance with generally accepted accounting principles and applicable laws, and shall be in sufficient detail to permit an annual audit. MAKER is a. the producer of a product, or, b. the person who signs a check or promissory note, which makes him/her responsible for payment. MALPRACTICE INSURANCE see E&O INSURANCE. MANAGED RECEIVABLES is the total receivable amounts on which a company continues to perform billing and collection activities, including receivables that have been sold with and without credit recourse and are no longer reported on the balance sheet. See OWNED RECEIVABLES. MANAGEMENT ACCOUNTING is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies, and tax authorities. MANAGERIAL ACCOUNTING is a system using financial accounting records as basic data to enable better business decisions in the areas of planning and control. MANAGEMENT BY CRISIS is a reactive method of administration whereby strategies are formulated almost at the moment that events occur; basically short-sighted policy often leading to organizational confusion. MANAGEMENT BY EXCEPTION (MBE) is a management method by which only exceptional events are reported or acted upon. In this way management can focus only on those results or occurrences that deviate in some way from that what was expected. MANAGEMENT BY OBJECTIVES (MBO) is a management theory that calls for managing people based on documented work statements mutually agreed to by manager and subordinate. Progress on these work statements is periodically reviewed, and in a proper implementation, compensation is usually tied to MBO performance. MANAGEMENT CONTROL SYSTEM is essentially a strategic tool for holding managers accountable and responsible for their performance. Existence of such a system also provides feedback for managers to know how they perform, in which direction the organization is heading, and what type of course correction may be required to stay on course. MANAGEMENT EXPENSE is the management fee deducted from a fund's average net assets to pay an advisor or subadvisor. This fee is normally on a sliding scale. As the net assets of the fund increase, the percentage deducted for management fees decreases. A fund can also have a fixed rate or flat fee to compensate the advisor. MANAGEMENT INFORMATION SYSTEM (MIS) is a well-developed data management system that provides uniform organizational information from all areas of the entity within a database. Information within the database is manipulated to help management reach accurate and rapid organizational decisions. MANAGEMENT LETTER identifies issues not required to be disclosed in the Annual Financial Report but represent the auditor's concerns and suggestions noted during the audit. MANDATORY TRANSFERS are transfers from the current (operating) fund group to other fund groups arising out of binding legal agreements related to the financing, e.g., in education: debt retirement, interest, and grant agreements with federal agencies and other organizations to match gifts and grants. Whereas non-mandatory transfers would be transfers from the current (operating) fund group to other fund groups made at the discretion of management to serve various objectives, e.g., additions to loan funds, endowment funds, plant additions, and voluntary renewal and replacement of plant. MANNING VARIANCE is the difference between the amount of time that was expected to be worked at a machine-paced workcenter, based on the amount of receipts of the parent part, and the actual amount of labor hours recorded at the workcenter. MANUAL TAG SYSTEM is a inventory tracking system used in inventory management that tracks inventory using tags removed at the point of purchase. MANUFACTURING ACCOUNT is an accounting statement that is an integral part of the final accounts of a manufacturing organization. For any particular period, it indicates, among other things, prime cost of manufacturing, manufacturing overhead, the total manufacturing cost, and the manufacturing costs of finished goods. MANUFACTURING COMPANY see MANUFACTURING CONCERN. MANUFACTURING CONCERN is an entity that derives its products for sale, thereby revenue, through the direct manufacture of those products. MANUFACTURING OVERHEAD is the total cost of indirect labor, indirect materials, and other indirect expenses associated with manufacturing products. MANUFACTURING STATEMENT see MANUFACTURING ACCOUNT. MAP can mean Manufacturing Application Protocol, Merchant Account Provider, Minimum Advertised Price, or Major Accounts Processing among many others. MARGIN see GROSS MARGIN. MARGIN (Stocks) allows investors to buy securities/assets by borrowing money from a broker/banker. The margin is the difference between the market value of a stock/asset and the loan a broker/banker makes. MARGIN ACCOUNT (Stocks) is a leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers. MARGINAL is just barely adequate or within a lower limit. MARGINAL COST is a calculation showing the change in total cost as a result of a change in volume, e.g. if one more item of output increases the total cost by $25, the marginal cost is $25. It is usually useful to determine marginal cost because it can aid in determining if the rate of production should be altered. MARGINAL PROFIT is the change in the total profit that results from the sale of an additional unit. MARGINAL REVENUE is the change in total revenue as a result of producing one additional unit of output. MARGINAL TAX RATE is the top rate of income tax that is charged to individuals on their earnings. MARGIN ANALYSIS see CONTRIBUTION MARGIN ANALYSIS or GROSS PROFIT MARGIN ANALYSIS. MARGIN CALL (Stocks) is a demand for additional funds because of adverse price movement is a stock. MARGIN LENDING, in securities, is where the lender, usually a bank, will lend you between approximately 40% and 70% of the value of approved shares and managed funds. For example, if you have $30,000 in cash, you could borrow up to $70,000 and buy a $100,000 portfolio (assuming a lending ratio of 70%). This portfolio then becomes the security for your margin lending facility. MARGIN OF SAFETY, in accounting, is how much output or sales level can fall before a business starts making a loss. In investing, it is the difference between the intrinsic value of a stock, i.e. value based on stock valuation and what the company is actually worth and the price that the market sets on a stock, i.e. a stock price is a matter of the market participants' opinions. MARINE INSURANCE is insurance coverage protecting against loss or damage of goods transported by sea. MARK ENDORSEMENT, normally, it is when a signatory (payee) cannot endorse with their signature, due to illiteracy or an infirmary, the signatory is allowed to make a mark that identifies that the signatory has signed. Such mark endorsements are normally witnessed with the witness endorsing the mark endorsement. MARKETABLE CAPACITY is an assessment of total capacity compared to that capacity that sales projections indicate that the market can absorb. Dependent upon demand, the analysis will indicate whether the marketable capacity is at capacity, over capacity (inflationary), or under capacity (deflationary). MARKETABLE SECURITY is a readily tradable equity or debt security with quoted prices; to include commercial paper and Treasury bills. It is a "close to cash" asset which is classified as a current asset. MARKET ANAMOLY is a persistent and systematic differential of returns that cannot be accounted for by systematic risk factors, i.e. it is an inexplicable price distortion on a market. MARKET CAPITALIZATION is the total dollar value of all outstanding shares. It is calculated by multiplying the number of shares times the current market price. The term is commonly referred to as “market cap”. MARKET DISCOUNT is the stated redemption price of a bond at maturity minus your basis in the bond immediately after you acquire it. Market discount arises when the value of a debt obligation decreases after it's issue date. MARKET DISCOUNT BOND is any bond having market discount except: short-term obligations with fixed maturity dates of up to 1 year from the date of issue, tax-exempt obligations that you bought before May 1, 1993, U.S. savings bonds, and certain installment obligations. MARKETING EXPENSE see SALES & MARKETING EXPENSE. MARKETING LEVER is anything that provides positional advantage or power to act effectively: Potential levers may be price, brand name, corporate image, broad distribution, effective advertising, etc. MARKET MULTIPLE see PRICE/EARNINGS RATIO. MARKET POSITION, from a marketing context, is the strength of an entity or product within the target market. In investing, it is the amount and/or depth and breadth of holdings within identified sectors of the capital market. MARKET SEGMENT is a group of consumers, within a broader market, that has similar characteristics and needs. MARKET SHARE is the percentage of sales a company captures for a particular product line, i.e., the percentage of total industry sales that a particular company controls within a given market. MARKET TO BOOK VALUE is calculated by dividing the market value (MV) of a company, i.e., the total value of all its outstanding shares, by the value of its tangible assets (TA). Also known as TOBIN RATIO = MV/TA. MARKET VALUE, in general, is the price at which buyers and sellers trade similar items in an open marketplace. In the absence of a market price, it is the estimated highest price a buyer would be warranted in paying and a seller justified in accepting, provided both parties were fully informed and acted intelligently and voluntarily. See also OPEN MARKET VALUE (OMV). MARK-TO-MARKET (MTM) is the recording of the price or value of a security, portfolio, or account on a daily basis, to calculate profits and losses or to confirm that margin requirements are being met. This is done most often in futures accounts to make sure that margin requirements are being met. If the current market value causes the margin account to fall below its required level, the trader will be faced with a margin call. Mutual funds are marked to market on a daily basis at the market close so that investors have an idea of the fund's NAV. MARKUP is the amount added to the cost of goods in order to produce the desired profit. MARSHALLING is to make ready for action or use, e.g., the marshalling of resources. MASTER BUDGET formalizes the whole budget system into one single final document in which all the operational budgets flow; its goal is to draft the main economic and financial statements. However, dependent upon the individual or geographic location, is variously contains the cash budget only; or the income statement and the balance sheet combined; or the income statement and the balance sheet and the cash budget combined. MAT is Management, Administrative, and Technological. MATCHING, in accounting, is the matching of invoices to purchase orders and delivery notes prior to payment. MATCHING CONCEPT is the accounting principle that requires the recognition of all costs that are directly associated with the realization of the revenue reported within the income statement. MATCHING PRINCIPLE see MATCHING CONCEPT. MATERIAL CONTROL normally refers to the department responsible for the proactive control of materials within a manufacturing environment: Do procedures exist for storage, release, and movement of material? Are materials in stores identified and controlled? Are in-process materials identified and controlled? Are materials in inspection identified and controlled? Do storage areas and facilities provide control to protect material from degradation? Are nonconforming items identified, segregated and controlled? MATERIAL CONTROL SYSTEM (MCS) is the software program used to control the routing and transfer of material within an automated material handling and control system. MATERIALITY is the importance of information or an event that influences a company's price of stock. MATERIALITY PRINCIPLE requires accountants to use generally accepted accounting principles except when to do so would be expensive or difficult, and where it makes no real difference if the rules are ignored. If a rule is temporarily ignored, the net income of the company must not be significantly affected, nor should the reader's ability to judge the financial statements be impaired. MATERIAL MISSTATEMENT is accidental or intentional untrue financial statement information that influences a company's value or price of stock. MATERIAL REQUISITION PLANNING (MRP) entire purpose is to plan for materials that are required for a particular purpose. An MRP is usually automated using transaction codes. MRP can be done for a single material item or a multilevel plan can be run for a material within a plant. MRP creates purchase requisitions, purchase orders, or planned orders for the material. This is done on the basis of the settings selected in the transactions. To take an example, a particular material item may be procured externally, in such a case, an MRP run creates requirements for that material through the respective plant from a sales document. MATERIALS are physical goods (and their cost) used in the manufacture of a product, often separated into DIRECT MATERIAL (that which goes directly into the product such as cream into ice cream, or steel into cars) and INDIRECT MATERIAL (that which is used in maintaining the manufacturing environment such as cleaning fluids or oil for lubrication of manufacturing equipment). Indirect materials are usually part of the overhead component of cost. The term material, when used without the direct or indirect qualifier, usually refers to direct materials. MATERIAL WEAKNESS is a condition that could potentially result in the material misstatement of the financial statements. MATRIX ORGANIZATION is where a company superimposes a group or interdisciplinary team of project specialists on a functional organizational design. In a matrix organization the members have dual allegiances, i.e., to that particular assignment or project as well as their normal organizational department. MATURITY DATE of a financial asset is the date at which that asset is converted into a specified amount of money or physical assets, e.g. the date on which an issuer of a bond promises to repay the full amount borrowed. MATURITY VALUE, in securities, is the amount that will be received at the time a security is redeemed at its maturity. For most securities, maturity value equals par value; in insurance, it is the amount payable under a whole life insurance policy if the insured person lives to the last age on the mortality table on which the values of the contract were based. MBE see MANAGEMENT BY EXCEPTION. MBO see MANAGEMENT BY OBJECTIVES. MCP is Microsoft Certified Professional or Master of City Planning. MCS see MATERIAL CONTROL SYSTEM. MD&A is an acronym for Management Discussion and Analysis. MD&A usually refers to that section of a corporate annual or quarterly report that provides managerial comment on corporate performance for the time period in question. MEAN is the measure of central tendency; also called the 'average'. It is calculated by the sum of the data points divided by the number of data points. MEASUREMENT THEORY involves the assignment of numerals to objects or events in order to represent certain attributes, or properties, of those objects and events. MEDIAN is the value of the midpoint variable when the data are arranged in ascending or descending order. MEDIA PLAN, in advertising, is the plan that details the usage of media in an advertising campaign including costs, running dates, markets, reach, frequency, rationales, and strategies. MEDIUM TERM usually encompasses a calendar of 2-3 years or less. MEDIUM TERM ASSETS, usually, are those assets that are expected of having a useful life of between six months and two years of the present. MEMO ENTRY is supplemental or explanatory information on a reporting schedule. It is used for clarification of sometimes complex entries. MEMORANDUM ACCOUNT see SPECIAL MEMORANDUM ACCOUNT. MEMORANDUM FOR RECORD (MR) is an in-house memo covering information that would otherwise not be recorded in writing. MER (Management Expense Ratio) is the percentage of the assets that were spent to run a mutual fund. It includes things like management and advisory fees, travel costs and 12b-1 fees. The expense ratio does not include brokerage costs for trading the portfolio. Also referred to as the Expense Ratio. MERCHANDISE is commodities offered for sale or to engage in the trade of commodities that are for sale. MERCHANDISING CONCERN is an entity that derives its revenue through the provisioning of products provided or manufactured by others. See MANUFACTURING CONCERN. MERGER is the union of two or more commercial interests or corporations. The distinction being that identity of the merged companies, product lines, etc., may or may not lose its individual identity. MEZZANINE FINANCING usually is a class of investment that is a stage intermediate between venture capital and an initial public offering; or, subordinated debt used in leveraged buyouts (LBOs). MID-CAP is a stock with a capitalization, total equity value, between $500 million and $5 billion. MIDDLE MARKET COMPANY: see MID-CAP. MILLAGE is a rate (as of taxation) expressed in mills per dollar. MINIMUM PAYMENT is the minimum amount that you must pay, e.g. usually monthly on a home equity loan or line of credit. In some payment agreements the minimum payment may be "interest only" (simple interest). In other loan agreements, the minimum payment may include principal and interest (amortized). MINIMUM WAGE is the lowest compensation you are allowed to pay an employee for hourly work. It is defined by Federal, state, and sometimes local laws. State or local laws may be more restrictive than Federal law, and certainly may differ. MINORITY INTEREST is the interest or percentage ownership of a group of stockholders who, in total, own less than 50% of the shares in the corporation. MINOR MATTERS is a term used in accounting and legal reports to cover areas considered to be cosmetic or superficial; thereby deemed by the author to be of little consequence. MIS see MANAGEMENT INFORMATION SYSTEM. MISAPPROPRIATON is a nonviolent criminal taking of property. Includes embezzlement, theft, and fraud. Often applied to an employee’s taking of an employer’s property. MISCELLANEOUS is a grouping consisting of a haphazard assortment of different kinds. MISCELLANEOUS INCOME is that income realized that is not directly related to the sale of standard products and services. MMOE is a slang acronym meaning Make Money or Else. MMU is Maintained Mark-Up. MODIFIED ACCELERATED COST RECOVERY SYSTEM (MACRS) is a system used in accounting to define the rate and method under which a fixed asset will be depreciated for tax purposes. MODIFIED ACCRUAL BASIS accounting is a mixture of the cash and accrual basis. The modified accrual basis should be used for governmental funds. To be recognized as a revenue or expenditure, the actual receipt or disbursal of cash must occur soon enough after a transaction or event has occurred to have an impact on current spendable resources. In other words, revenues must be both measurable and available to pay for the current period's liabilities. Revenues are considered available when collectible either during the current period or after the end of the current period but in time to pay year-end liabilities. Expenditures are recognized when a transaction or event is expected to draw upon current spendable resources rather than future resources. MODIFIED INTERNAL RATE OF RETURN is the rate of return which equates the initial investment with the terminal value, where the terminal value is the future value of the cash inflows compounded at the required rate of return (the opportunity cost of capital). MONETARY is anything pertaining to or having to do with money, money creation, money supply, and the government management of money. MONETARY ASSETS are measured at their collectible amounts, while nonmonetary assets are measured at historical costs. MONEY MARKET is a sector of the capital market where short-term obligations such as Treasury bills, commercial paper and bankers' acceptances are bought and sold. MONEY MARKET FUND is a fund that invests in various short-term debt instruments, i.e., commercial paper, negotiable certificates of deposit, banker's acceptances, Treasury bills, etc.. Shares seek to maintain a net asset value of $1 but the interest rate changes daily. MONEY MEASUREMENT CONCEPT stipulates that all business transactions must be expressed in money terms, i.e., if something cannot be measured in money; it will not be included in accounting books. MONEY MEASUREMENT PRINCIPLE see MONEY MEASUREMENT CONCEPT. MONETARY UNIT is the unit used to measure economic activity (e.g., U.S. $). MONETARY UNIT ASSUMPTION assumes that values can be relevantly measured in current monetary units. It is not necessary that the currency be stable or that inflation effects be negligible. The discount rate (cost of capital) automatically takes into account expected inflationary effect on dollar or inventory values for the specific entity. This supports economic valuation and enhances comparability. MONITOR, generally, is to keep tabs on; keep an eye on; or, keep under surveillance. In business, it is a person or firm appointed to review and report on, without controlling or approving, the day-to-day transactions of a business. Particulars of the engagement are usually set out in an exchange of letters, an agreement or court order. MORATORIUM a legally authorized postponement before some obligation must be discharged. MORTGAGE is a conditional conveyance of property as security for the repayment of a loan. MORTGAGE BOND is a bond in which the issuer has granted the bondholders a lien against the pledged assets. MOU is Memorandum of Understanding. MR see Memorandum for Record. MRP see MATERIAL REQUISITION PLANNING. MSCC is Material Supply Chain Cost. MSRP is Manufacturer's Suggested Retail Price. MTM see MARK-TO-MARKET. MUD is Multi Unit Discount. MULTINATIONAL is involving or operating in several nations or nationalities (Example: Multinational corporations). MULTIPLE see PRICE/EARNINGS RATIO. MULTIPLE REGRESSION of approximating cost is a statistical method that can be used to estimate a cost function when there is more than one independent variable. MULTIPLIER is a. the investment multiplier which quantifies the overall effects of investment spending on total income; or, b. the deposit multiplier which shows the effects of a change in bank deposits on the total amount of outstanding credit and the money supply. MUTUAL AGENCY is the right of all partners in a partnership to act as agents for the normal business operations of the partnership, with the authority to bind it to business agreements. MUTUAL FUND, according to the SEC, is a company that brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings. |
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