Accounting, Business Studies and Economics Dictionary
NAIRU - Short for ‘nonaccelerating inflationary rate of unemployment’. The rate of unemployment associated with potential national income and at which a steady, non accelerating or non decelerating inflation can be sustained indefinitely. Also called the natural rate of unemployment.
NASDAQ - The computerised system that was established by NASD to help facilitate trading by giving broker or dealers the current bid/ask price quotes on some listed stocks. Differing from the New York Stock Exchange (NYSE) , the NASDAQ ( National Association of Securities Dealers Automated Quotation system) doesn't have a trading floor.
Nash equilibrium - (game theory) A stable state of a system that involves several interacting participants in which no participant can gain by a change of strategy as long as all the other participants remain unchanged.
National debt - The current volume of outstanding federal government debt.
Nationalised industries - Public corporations previously part of the private sector which were taken into state ownership.
Natural level of unemployment - The level of equilibrium unemployment in monetarist analysis measured as the difference between the (vertical) long run gross labour supply curve (N) and the (vertical) long run effective labour supply curve (ASL).
Natural rate of unemployment - The unemployment rate when the economy is at full employment and the labour market clears. Frictional, structural and seasonal unemployment may exist at the natural rate of unemployment.
Natural scale - A scale in which equal absolute amounts are represented by equal distances.
Natural wastage - When a firm wishing to reduce its workforce does so by not replacing those who leave or retire.
Near money - Liquid assets that are easily convertible into money without risk of significant loss of value and can be used as short term stores of purchasing power but are not themselves media of exchange.
Needs - Goods or services essential for living.
Negative externality - A cost to a third party who is not part of the transaction.
Negative goodwill - A Term used in a business combination. Negative goodwill is accounted for under the purchase (accounting) method when the fair market value of the net assets of the acquired company exceeds the purchase price paid. The credit difference reduces certain assets acquired. If any remaining credit exists, it is accounted for as an extraordinary gain.
Negligence - 1. refers to the act or omission of something that a reasonable and prudent man, who is responding to ordinary considerations would or would not do. Or 2. accountant's failure to conduct an audit with "due care." Ordinary negligence applies to judgment errors resulting from a lack of experience, training, or oversight: it is unintentional. Gross negligenceresults when the accountant recklessly disregards established accounting, reporting, and auditing standards.
Negotiation - Another name for collective bargaining - joint decision-making involving bargaining between representatives of the management and of the workforce within a firm.
Net - 1. gross amount reduced by applicable reductions. For example, net sales equals gross sales less sales returns and allowances and sales discounts. Another example is net purchases that equal gross purchases less purchase returns and allowances and purchase discounts. Or 2. (informal) net profit after taxes.
Net debt – Long term debt + short term loans minus cash on hand.
Net exports (NX) - The value of total exports minus the value of total imports. Represented by the expression X - M as a component of aggregate expenditure, where X is total exports and M is total imports.
Net migration - The difference between the number of people entering a country (or region) and the number leaving it.
Net present value (NPV) – The present value from future income from an investment project, less the cost. This method is used to evaluate investments, where the NPV of all cash outflows (such as the cost of the investment) and cash inflows (returns) is calculated by using a predetermined discount rate.
Net property income from abraod (NPIA) - Income earnt by domestic residents who own property overseas minus income paid to overseas residents who own propert domestically. It includes rent, interest, dividends and profits.
Net realisable value (NRV) - The value of an asset when sold. i.e. the amount received.
Network analysis or Critical path analysis - A technique used to find the cheapest or fastest way to complete an operation.
Neutrality – 1. (Economics)). Money is neutral in an economic model in there is a change in the model and the level of the nominal money has no effect on the real level of equilibrium. Or 2. (Accounting). Absence of bias. For example, financial information should be neutral and is not intended to favour an investor over a creditor. Neutrality is one of the ingredients of reliability.
Neutrality of money - The doctrine that the money supply affects only the absolute level of prices and has no effect on relative prices and hence no effect on the allocation of resources or the distribution of income.
New classical economics - An approach to explaining macroeconomic fluctuations under the maintained hypothesis that cyclical unemployment is always zero. Fluctuations in economic activity are explained by shocks to technology and tastes rather than to markets that fail to clear.
Newly industrialising countries (NICs) - A small group of countries with advanced industrial or financial sectors involved in international trade and in advanced stage of development. (Argentina, Brazil, Greece, Hong Kong, South Korea, Mexico, Portugal, Singapore. Spain, Taiwan and former Yugoslavia).
NICs (Newly industrialised countries) – These are countries such as Singapore, Malaysia and Mexico which have recently gone through the process of industrialisation.
Niche market - A small part of the market which major producers are not concerned with.
Nominal - Refers to small payments or value. The distinction between nominal and real figures. Nominal figures are those using current prices, interest rates, etc. Real figures are figures corrected for inflation.
Nominal GNP - The output off all goods and services valued at current prices.
Nominal values (economics) - The values of variables expressed in current prices.
Nominal variables - Variables measured in monetary units
Non accelerating-inflation rate of unemployment (NAIRU) - The rate of unemployment associated with potential national income and at which a steady, non accelerating or non decelerating inflation can be sustained indefinitely. Also called the natural rate of unemployment.
Non-cooperation - A form of industrial action when employees refuse to comply with new working practices.
Non current assets – Assets which are expected to owned by the business for more than twelve months e.g. property, plant and equipment. This is different from current assets which a business expects to turn into cash in under twelve months i.e. Inventory and accounts receivable.
Non co-operation - A form of industrial action when employees refuse to comply with new working practices.
Non discretionary – 1. (Accounting), means it is mandatory, not up to the individual or company. Or 2. (Economics), effects that happen to government revenue and spending with changes in the business cycle.
Non excludability - Where it is not possible to provide a good or service to one person without it thereby being available for others to enjoy.
Non interest bearing bond - A bond that has been issued at a discount from the par value stated on the bond but does not pay any interest. The interest earned is the difference between the purchase price and the redemption price. United States treasury bills for example are a non-interest bearing bond.
Non price competition - The means by which firms strive to increase sales and increase market share other than by undercutting rivals e.g. branding and advertising.
Non profit organisation - An organisation that is not setup to make a profit but to provide a service such as a charity or sports club.
Non strategic behaviour - Behaviour that does not take account of the reactions of rivals to one's own behaviour.
Normal activity – The level of production that will satisfy average demand by consumers over a time span (often five years) that includes trend, seasonal, and cyclical factors. It is a long run average expected activity that is a basis for developing the factory overhead application rate.
Normal costs - 1. the annual average of product costs, not actual product costs that are affected by month-to-month fluctuations in production volume and by erratic or seasonal behaviour of many overhead costs. Typical examples of erratic behaviour include repairs and maintenance, fuel, air-conditioning costs, vacation and holiday pay, and the employer's share of Social Security taxes. All the costs that distort monthly overhead rates are collected in the annual overhead pool along with the kinds of overhead that do have uniform behaviour patterns. In summary, normal costs are the sum of actual direct materials, actual direct labour, and applied factory overhead. Or 2. the pension plan costs incurred during an accounting period for services performed during the period.
Normal distribution - A naturally occurring frequency distribution where many of the values cluster around the mean, but where there are a few high and low values away from the mean.
Normal distribution curve – A graphical representation of the normal distribution.
Normalise - This term can be applied to many aspects of accounting. It means to average or smooth out a set of figures so they are more consistent with the general trend of the business. This is usually done using a moving average .
Normal loss - This is the loss that can be considered under normal efficient operating procedures in the production process e.g. the loss of liquid through evaporation in chemical production. It is an inevitable consequence of the production process under efficient operation conditions and is therefore considered to be unavoidable. Losses greater or less are refereed to as abnormal gains or losses and may have resulted from reduced or improved efficiency.
Normal profit - The opportunity cost of capital and risk taking just necessary to keep the owners in the industry. Normal profits are usually included in what economists (but not businesspersons) call total costs.
Normal spoilage – The product deterioration that is expected even under the best operating conditions. It is inherent and unavoidable in the short run. Costs of normal Spoilage are allocated to the remaining good units in Inventory.
Normative statement - A statement about what ought to be, in an ethical sense, as opposed to what actually is, in a positive sense. An expression of an opinion that cannot be verified by observation.
Notes to the financial statement – This is a detailed set of notes that are submitted with the financial statements. These notes explain specific points in relation to parts or items on the statements.
Numerical flexibility - Where employers can change the size of their workforce as their labour requirements change.
NPV - Net Present Value.
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