Business / Accounting Glossary

Property Dividend: The distribution to shareholders of assets other than cash.

Property Plant And Equipment: Tangible, long-lived assets acquired for use in business operations: includes land, buildings, machinery, equipment, and furniture.

Property Plant And Equipment Turnover: A measure of how well property, plant, and equipment are being utilized in generating a period's sales: computed by dividing net sales by average property, plant and equipment.

Proprietorship: A business owned by one person.

Prospectus: An official document that contains information required by the Securities & Exchange Commission to describe a mutual fund.

Provisions: One or more accounts set up to account for expected future payments (eg. where a business is expecting a bill, but hasn't yet received it).

Public Companies: Entities whose stock is publicly traded.

Purchase Discount: A reduction in the purchase price, allowed if payment is made within a specified period.

Purchase Invoice: See Invoice .

Purchase Ledger: A subsidiary ledger which holds the accounts of a business's suppliers. A single control account is held in the nominal ledger which shows the total balance of all the accounts in the purcha . . . View Full Definition

Purchase Method: A method used to prepare consolidated financial statements when one company has acquired a controlling interest in another company with similar activities by exchanging cash or other assets . . . View Full Definition

Purchase Returns And Allowances: A contra-purchase account used for recording the return of, or allowances for, previously purchased merchandise.

Purchases Account: An account in which all inventory purchases are recorded: used with the periodic inventory method.

Purchases Journal: A special journal in which credit purchases are recorded.

Purchasing Power: A measurement of the relative value of money in terms of the quality and quantity of goods and services it can buy. Inflation decreases purchasing power: deflation increases it.

Rate Of Return: Also called the “yield,” this is the return on an investment expressed as a percentage of its cost (e.g., $3 annual return divided by $24 price per share = .125 or a 12.5% rate of return).

Raw Materials: This refers to the materials bought by a manufacturing business in order to manufacture its products.

Real Accounts: Accounts that are not closed to a zero balance at the end of each accounting period: permanent accounts appearing on the balance sheet.

Realisation Principle: The principle whereby the value of an asset can only be determined when it is sold or otherwise disposed of, ie. its 'real' (or realised) value.

Realized Gains And Losses: Gains and losses resulting from the sale of securities in an arm's length transaction.

Rebate: If you pay for a service, then cancel it, you may receive a 'rebate'. That is, you may be refunded some of the money you paid for the service. (eg. if you cancel a 1 year insurance policy af . . . View Full Definition

Receipt: A term typically used to describe confirmation of a payment - if you buy some petrol you will normally ask for a receipt to prove that the money was spent legitimately.

Receivables: Claims for money, goods, or services.

Reconciling: The procedure of checking entries made in a business's books with those on a statement sent by a third person (eg. checking a bank statement against your own records).

Recourse: The right to seek payment on a discounted note from the payee if the maker defaults.

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