Accounting, Business Studies and Economics Dictionary

Gains from trade - The increased output due to the specialisation according to comparative advantage that is made possible by trade.

Game theory (or the theory, of games) - The theory that studies rational decision making in situations in which one must anticipate the reactions of one's competitors to the moves that one makes.

Garbage in, garbage out  - Computing term, used in computing industry it is used to mean that if the data being entered into a system is incorrect, the resulting data coming out will also be wrong.

GATT The General Agreement on Tariffs and Trade (now called the WTO or World Trade Organisation) - formed in 1947, headquarters in Geneva, and currently with 105 member countries. An international agreement committed to free multi trade through the reduction of trade barriers.

GBP - United Kingdom Pound Sterling (Currency Code).

GDP (gross domestic product at market prices) - The value of output (or income or expenditure) in terms of the prices actually paid. GDP = GVA + taxes on products - subsidies on products.

Gearing (AKA: leverage) – The relationship between funds raised from loans and issuing shares.  The comparison of a company's long term fixed interest loans compared to its assets. In general two different methods are used: 1. Balance sheet gearing is calculated by dividing long term loans with the equity (or proprietor's net worth). 2. Profit and Loss gearing: Fixed interest payments for the period divided by the profit for the period.

Gearing ratios - Explore the capital structure of a business by comparing the proportions of capital raised by debt and equity.

General equilibrium - A situation where all millions of markets throughout the economy in a simultaneous state of equilibrium.

General expense - Expense not directly connected with any single department.

General government debt - The combined accumulated debt of central and local government.

General government deficit (or surplus) - combined deficit (or surplus) of central and local government.

General journal - Simplest type of journal. I! is used when no spe­cial journal exists to record a transaction, usually when a transaction occurs infrequently. Examples are the declaration of a dividend, correc­tion of an accounting error, and an appropriation of retained earnings. It has only two money columns, one for debits, the other for credits.

General ledger - Record of a business entity's accounts. The gen­eral ledger contains the accounts that make up the entity's financial statements. Separate accounts exist for individual assets, liabilities, stockholders' equity, revenue, and expenses. A trial balance is prepared of the general ledger accounts at the end of the accounting period to assure that total debits equal total credits.

Generally accepted accounting principles (GAAP) - Standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial state­ments.  GAAP is the combination of generally accepted methods for keeping accounting information and policy board set standards.

General partner - 1. member of a partnership who is jointly and severally liable for all debts incurred by the partnership that is, a partner who does not have limited liability. Or 2. managing partner of a limited partnership who is in charge of its operations. A general partner has unlimited liability.

General union - A trade union which represents workers (often unskilled but also include semi­skilled) from a variety of trades.

Generic strategies - Strategies that can be used by any type of business organisation.

Geographical immobility - The lack of ability willingness of people to move to jobs in other parts of the country.

Geographical mobility - The ease with which workers can move from one occupation to another in a different location.

Geographical segment - A segment or component of an organisation that (1) provides a range of products and/or services within a specific economic environment and (2) that is therefore subject to any risks and possible returns that are varied or different from those risks and returns of the firms components which are operating in other alternative economic environments.

Giffen good - An inferior good for which the negative income effect outweighs the substitution effect so that the demand curve is positively sloped.

Gifts in kind -  Non-cash gifts which may be tangible or may be intangible items.

Gilt - A  UK government issued bond.  Equivalent to a United States Treasury securities.

Globalisation (Globalization) – The integration of the worlds economies brought about by the rapid improvements in communication and transportation. Globalisation involves the spread of economic, social and cultural ideas across the world, and growing uniformity between different places that result from this spread.  It has come about as a result of increased integration of national economies through growth of international trade, investment and capital flows, made possible by rapid improvements in technology.

GNP - Gross national product.

GNP deflator - A price index that measures the changes in prices of all goods and services produced by the economy.

GNP per capita - Gross national product (see above) divided by the population. It indicates average economic activity and income and takes no account of income distribution.

GNY (gross national income) - GDP plus income from abroad.

Goal – The aim or milestone the organisation tries to achieve that has evolved from either a strategic issues and/or operational planning. Goals can be quantitative or qualitative. Goals are normally more general in their nature, while objectives on the other hand tend to be more specific, often both measurable and possibly time based.

Going concern – It is assumed for accounting purposes a business will continue indefinitely. If the concern is not liquid, the viability and therefore sustainability of that entity being able to continue its operations in the future may be doubt.

Going concern concept (continuity concept) - The assumption that an accountant makes when they are preparing the set of accounts for a firm. That the firm which the statements are  being prepared for will remain in existence in the foreseeable future.

Going public (initial public offering IPO) - Refers to those activities and steps that relate to and are needed when offering a private company's shares to the public at large i.e. floating the private company on the stock exchange.

Going rate – The price that goods or services ‘on average’ are sold for.

Golden handcuffs - Contractual agreement almost virtually assur­ing that the stockbroker will stay with the brokerage firm for a speci­fied time period. The incentive may be in the form of high commission rates, bonuses, participation in a forthcoming initial public offering (IPO) of the brokerage firm itself, or other attractive fringe benefits. The contract may specify a penalty the broker will incur such as for­feiting past commissions if he or she leaves the brokerage firm before a specified date.

Golden handshake - A clause in executive employment contracts that provides the executives with lucrative severance packages in the event of their termination. May include a continuation of salary, bonus, and/or certain benefits and perquisites, as well as accelerated vesting of stock options.

Golden rules of accounting -  1. Debits = Credits;  and, 2. Assets = Liabilities + Owner's Equity (The Accounting Equation).

Gold exchange standard - A monetary system in which U.S. currency is directly convertible into gold and other countries' currencies are indirectly convertible by being convertible into the gold-backed U.S. dollar at a fixed rate.

Goodhart's Law - Controlling a symptom of a problem, or only part of the problem, will not cure the problem: it will simply mean that part that is being controlled now becomes a poor indicator of the problem.

Goods – (accounting) Items of merchandise, finished products, supplies, or raw mate­rials. Sometimes the term is extended to cover all inventoriable items or assets such as cash, supplies, and fixed assets. (economics) Real things that can be touched as opposed to services which are things people do for you.

Goods markets - Markets in which outputs of goods and services are sold. Also called product markets.

Goodwill - This is an extra value placed on a business if the owner of a business decides it is worth more than the value of its assets. It is usually included where the business is to be sold as a going concern.

Go-slow – The reduction of output by workers whilst still carrying on tasks in their contract of employment.

Government - All public officials, agencies, and other orga­nisations belonging to or under the control of state, local, or federal governments.

Government accounting - Principles and procedures in accounting for federal, state, and local governmental units. Unlike commercial accounting for corporations, encumbrances and budgets are recorded in the accounts. Assets of a governmental unit are restricted for desig­nated purposes.

Government bonds or 'gilt-edged securities  - Government security paying a fixed sum money each year. It is redeemed by the government on its maturity date at its face value.

Government budget – Is a plan of all government revenue and spending.  Government budgeting is the financial plan and a basis for eval­uating performance and an expression of public policy and a form of control having the force of law. Thus, a governmental budget is a legal document adopted in accordance with procedures specified by applic­able laws. A governmental budget must be complied with by the administrators of the governmental unit for which the budget is prepared.

Government intervention - May be able to rectify various failings of the market. Government intervention in the market can be used to achieve various economic objectives which may not be best achieved by the market. Governments, however, are not perfect and their actions may bring adverse as well as beneficial consequences

Government purchases - All government expenditure on currently produced goods and services, exclusive of government transfer payments. Represented by the symbol G as one of the four components of aggregate expenditure.

Government surplus (from a tax on a good) – The total tax revenue earned by the government from sales of a good.

Grace period - The period or length of time between the date on your statement and the date payment is due.

Grant in aid - A transfer from one level of government to another.

Green belt - Areas designated by government, usually in rural areas, where the development of business is prohibited.

Green field sites - Areas of land, usually on the outskirts of towns and cities, where businesses develop for the first time.

Greenmail - A payoff given to a potential acquirer by a company targeted for a takeover. In most cases, the targeted company buys back its shares at a significantly higher price. In reciprocation for selling the shares back, the suitor agrees to end the attempted takeover.

Green revolution The increase in grain produced in LDCs associated with the development of new high-yielding hybrid strains of rice, corn and wheat.

Green tax - A tax on output designed to charge for the adverse effects of production on the environmen1 The socially efficient level of a green tax is equal to the marginal environmental cost of production.

Gresham's law - The theory that "bad," or debased, money drives "good," or undebased, money out of circulation because people keep the good money for other purposes and use the bad money for transac­tions.

Gross - 1. the whole of any income before any deductions are subtracted. Or 2. any total  before deductions are subtracted e.g.  gross labour or gross income.

Gross domestic investment - The creation of capital goods, such as factories and machines, that can yield production and hence consumption in the future. Also included in this definition are changes in business stocks and repairs made to machines or buildings. Gross investment is total investment before depreciation.

Gross domestic product (GDP) -  National income as mea­sured by the output approach; equal to the sum of all values added in the economy or, what is the same thing, the values of all final goods produced in the economy. It can be valued at current prices to get nominal GDP, which is also called GDP at current, or market, prices; or it can be valued at base-year prices to get real GDP, which is also called GDP at constant prices.

Gross investment - The total value of all investment goods produced in the economy during a stated period of time.

Gross loss - The trading account balance if it has a debit balance i.e. Cost of sales greater than sales.

Gross margin - Refers to the % or difference between the sales price and the cost of sales.

Gross national product (GNP) - The sum total of all final goods and services produced by a country in a year, plus the value of net property income from abroad. This is measured in the currency of the country which is then converted to US. dollars to allow inter-country comparisons.

Gross national product (GNP) - The total output of goods and services produced by the country in a year, plus the value of net property income from abroad.

Gross national income (GNY)-  GDP plus net income from abroad.

Gross value added at basic prices (GVA) - The sum of all the values added by all industries in the economy over a year. The figures exclude taxes on products (such as VAT) and include subsidies on products.

Gross negligence - Any action and/or  omission that is in reckless disregard of the possible negative consequences to the safety and/or property of another individual or entity.

Gross pay (salary) - Employee salary prior to the application of taxes and other deductions.

Gross profit - The balance of the trading account assuming it has a credit balance.  Sales less cost of goods sold.

Gross profit margin (ratio) - Expresses operating profit before tax and interest (gross profit as a percentage of turnover).

Gross tuning - The use of macroeconomic policy to stabi­lise the economy such that large deviations from high employment do not occur for extended periods of time.

Gross weight - The total weight of a particular shipment which includes the packing material.

Group - Number of individuals or companies which assemble together in order to achieve a goal.

Group accounts - The financial statements relating to a group of companies. These accounts are normally presented as a consolidated  set of accounts.

Group norm - The usual characteristics of the behaviour of a group.

Growth rate – (Accounting) amount of change in some financial characteristic of a company. 1. percentage change in earnings per share, dividends per share, rev­enue, market price of stock, or total assets compared to a base year amount. (Economics) The increase in real GDP.

Growth stocks – Used to describe shares of young companies with little or no earnings history. They are valued on the basis of anticipated future earnings and thus have high price-earnings ratios. They generally grow faster than the economy as a whole and also faster than the industry of which they are a part. They are risky because capital gains are speculative, especially in the case of young companies in new industries. An example of a growth stock is a high-tech company.

Guarantee – Agreement by the seller of goods or services to satisfy for a stated period of time deficiencies’ in the items quality or performance. 

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