Glossary
- Accumulated depreciation
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The amount of accumulated depreciation.
- Annuity
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A sequence of equal payments made at equal periods of time.
- Annuity due
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An annuity whose periodic payments are paid at the beginning of each payment period.
- Bank discount
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A bank charge that is made for payment of a note at some point prior to maturation.
- Book value
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The difference between the original cost of an asset and its total amount in the accumulated depreciation.
- Cash discount
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A discount to the selling price to induce early payment.
- Compound interest
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When the interest of each period is added to the principal in computing the interest for the next period.
- Depreciation
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An accounting method used to allocate the cost of a tangible or physical asset over its useful life.
- Discount rate
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An interest rate used to remove interest from a future value.
- Economic gains
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Economic gain or economic profit refers to the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs.
- Future value
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The total value of the set of payments at the end of the term
- Inflation
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A rise in prices, which can be translated as the decline of puchasing power over time.
- Interest
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The amount of interest that is paid or earned.
- Interest rate
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The rate of interest that is charged or earned during a specified time period.
- Negotiable instrument
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A document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer named on the document.
- Opportunity cost
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The potential benefits that an individual, investor, or business misses out on when choosing one alternative over another.
- Ordinary annuity
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An annuity whose periodic payments are made at the end of the time period.
- Present value
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The amount of money at the beginning of a time period in a transaction.
- Principal
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The original amount of money that is borrowed or invested in a financial transaction. Also called as the present value.
- Saving
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The amount of money left over after spending and other obligations are deducted from earnings.
- Simple interest
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A system for calculating interest that primarily applies to, in general, short-term financial transactions with a time frame of less than one year.
- Time period
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The length of the financial transaction for which interest is charged or earned. It may also called the term.
- Time value of money
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A financial principle that states the value of a dollar today is worth more than the value of a dollar in the future.
- Trade discount
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A discount that is cut from the retail or published price of an item.
