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Many people get confused when they hear the words retail and wholesale. As far as many are concerned they are both the same since many businesses that are engaged in the sale of goods provide their goods at both wholesale and retail prices. To clear the air, let us define who a retailer and wholesaler are.
A Retailer is someone who does not buy goods in bulk and sells single items of goods at the same price no matter the amount that is bought. So if you buy 3 tins of milk valued at $40 each, then you would have to pay $40 x 3 = $120. The same would apply if you bought 100 tins of milk. You would have to pay $400. A Wholesaler, on the other hand, buys products in bulk for the sole purpose of re-selling them. Because of making his purchase in bulk, a wholesaler is able to sell his goods back at a cheaper cost than a retailer. Looking back at the same milk example from before, if you bought 3 tins of milk from a wholesaler, you may get them for anywhere between $100 and $110. So you save when you buy from a wholesaler.
Recurring Payments are payments that are made at certain intervals and not necessarily for a specific amount of money. Some cases where recurring payments are applied include subscriptions to websites, rent, utility bills, and mortgages. These payments recur after a specific period of time. The amount payed may not always be the same, but the key is the fact that always have to be paid.
Take mortgages, for example. Every month your payment is due, so it is a recurring expense. Recurring Payments for utility bills include light and water and telephone. These are normally billed on a monthly basis, so the payments recur monthly.
Cost Sharing is the splitting up costs amongst two or more individuals or companies in order to achieve a common good. This means that all costs incurred are shared up among those who are involved in the business transaction, not necessarily equally. Doing so enables all involved to be able to handle all costs since no one person would be bearing the brunt of the costs.
For instance, John and Mary may want to purchase a vehicle. Since they both live in the same house, it would be more cost effective for them to pool their resources and buy one car instead of standing the cost of one car each alone. So they agree to share the cost of buying the car 50-50. This is a very simple example of cost sharing. Another example is the aid some governments give to parents who have children in school so as to help to ease the burden of school fees. In this instance, cost sharing may not be 50-50, but at least the parent would not have to bear the expenses alone.
A Budget is an estimate of the income and expenditures for a specific period of time, usually one year. That however is a broad definition as budget can also be defined as an estimate of the income and expenditures per month, or weekly, or even fortnightly. This is because, in general, persons get paid at different times, some monthly, some weekly, others every two weeks. When speaking of a company, however, it would be a yearly thing.
Budgets are prepared in order to allocate funds for particular events or programs and for salaries and other expenses. If a budget is not prepared, a company (or individual) would be spending money recklessly as some things would get left out and proper accountancy may become compromised.
A Debenture is a long-term debt instrument that governments and large companies use to obtain funds, whether on the local or international financial market. It is similar to bonds, the only difference being that the conditions of security are not the same. A debenture is normally unsecured in that there are no liens or pledges on particular assets. It is nonetheless secured by all the properties that have not otherwise been pledged. If bankruptcy should occur, all debenture holders are considered general creditors and as such benefit from it.
Debentures have an advantage in that the person who issues the debentures is left with certain assets untouched which allows them to use these as a means of obtaining finance in the future. In addition, debentures are usually freely transferable by the debenture holder, allowing him to give it to someone else without repercussion.
Have you ever heard the expression “a hostile takeover”? Well, that pretty much defines what takes place when a larger corporation or company takes over smaller ones. The reasons for a takeover vary from the smaller company facing hard times to the smaller company having a good business footing that the larger corporations want in on. In effect, when one business takes over another, it means that the company doing the takeover is acquiring the assets and liabilities of the other company.
For example, Company A may be a small business with offices in several key countries. Company B, a much richer and bigger and less geographically spread organization, sees the prospect of increasing their reach to a global market by acquiring Company A. Negotiations are entered into and Company A agrees to sell out to Company B. Thus Company B has taken over Company A.
The Straight Line Method of calculating interest is pretty much straight forward, no pun intended. This method keeps the interest that is paid back at a fixed value. Simply put, you will pay back the same amount of money each time you make a payment until you have finished paying for the loan. Some people prefer this method as they do not need to be recalculating how much they have to pay each time but have one figure to work with.
Let us say, for arguments sake, that you borrowed $1,000,000 at 5% straight line interest. It means that everytime that you go to make a payment, you will be paying $1,000,000 x 5% = $50,000 until the loan has been completely repaid. The Straight Line Method produces one “straight” repayment figure.
If you are in discussions with someone for a loan, the lender may tell you that you have to pay it back with interest on a Reducing Balance basis. What this means is that each time you make a payment on your loan, the rate of interest that you are being charged is applied to the reduced balance of the amount you payed back. That means you are paying interest only on the amount of money that you have left to repay.
For example, if you borrow a loan of say $200,000 at a rate of 10% on a reducing balance basis, your first payment would be $200,000 x 10% = $20,000. So, you would now owe $200,000 - $20,000 = $180,000. The next time you make a payment, the interest would be applied to your reduced balance, which is the $180,000. So your next payment would be $180,000 x 10% = $18,000. You would now owe $180,000 - $18,000 = $162,000. The next payment you make would be 10% of $162,000, and so on. In the end, you end up paying less for your loan due to the reducing balance method. And as you can see, you pay back less each time.
An Appraisal is an evaluation of a specific piece of personal property (like a car) or real property (like land or a house). Properties can range from cars to trucks to buildings to furniture. Normally, appraisals are done on fixed assets. The value placed on the property (or asset) is evaluated by an Appraiser.
Say, for example, you have a house you want to insure. An Appraiser would come by the premises and make an assessment as to what he believes the property is worth, an estimated market value. Factors that can affect an appraisal’s final value include, but are not limited to, age of the property (though fixed assets like buildings and land tend to increase in value over time), location of the house (good or bad neighbourhood), additions done over time, and any other relevant bit of information that may add to the value of the house. Based on the final appraised value, the insurance company would then be able to calculate the insurance cost of the property.
Auditing is the process of examining accounting documents and their supporting evidence for the purpose of reaching an informed opinion concerning their propriety. What this means is that checks are made of financial documents and statements of the company or business that is being audited to ensure that everything has been entered correctly in the books of the business. Audits usually reveal any discrepancies that may exist in the documents and Auditors then make recommendations as to how these can be rectified. The business then tries to implement the measures so as to prevent a recurrence of the same issues.
Auditing also helps a business to see how good or bad it is doing. Based on audited financial statements, a business will know exactly how profitable (or not) it is and what profit (or loss) it made over the period being audited, both before and after tax. This is good for companies as it helps them to see where in the market they are and what areas need to be brushed up on in order to produce better financial results by the time the next audit is due.
