ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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REVENUE ANTICIPATION NOTE Definition
REVENUE ANTICIPATION NOTE (RAN) is a note sold by municipalities as a temporary financing pending the arrival of certain revenues, which are then used to payoff the note. Usually the income on these notes is exempt from federal income taxes.
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BUSINESS UNIT is equivalent to a wholly owned subsidiary except that it is not treated as a separate legal entity. It is an organization within a firm that could operate separately because it has all support functions contained within the business unit. The internal financial reporting from a business unit to the corporate office is basically identical to a separate legal entity.
STEP-UP LOAN is a type of home loan that offers varying equated monthly installments (EMIs) spread over the loans tenure, i.e. the EMI is lower in the initial years, but over time the EMI increases. One of the primary advantages of a step-up loan as compared to a normal home loan is that it increases the loan eligibility of the individual. Since this loan takes into account the future earning potential of the prospective borrower, it factors in the imminent hike in the earnings going forward and adjusts the loan eligibility amount accordingly. Step-up loans are also generally available only to salaried individuals and professionals. In other words, businessmen cannot take advantage of this type of loan. This is because the general feeling among lenders is that salaries have a tendency to rise year on year. This is not always the case with businesses, which may be doing well at a given point in time but are generally conceived to be unpredictable in nature. The determinant on whether step-up loans are better or a normal home loan depends on individual requirements. There are various products designed to meet the varying requirements of individuals. However, the truth with a step-up is that it increases the net cash outflow for the borrower. In this way, the risk to the borrower on being able to satisfy future payments due to cash flow considerations could be potentially high.