COMPENDIUM
Budget Terms and Concepts

Donald M. Patimo, MPM

In partial fulfillment of the requirements in Budget Preparation and Fiscal Management

October 18, 2008

Ability to pay

This refers to the borrower’s ability to make interest and principal payments on debts.

Accelerated depreciation

This refers to any depreciation method that produces larger deductions for depreciation in the early years of an asset’s life.

Account

This refers to a record of a business transaction.

This refers to a written or unwritten contract to purchase and take delivery with payment to be made later as arranged.

Account balance

This refers to the difference between the debit and the credit sides of an account.

Accounting period

This refers to a time interval at the end of which an analysis is made of the information contained in the bookkeeping records. Also, the period covered by the profit and loss statement.

Accounting price

A term often used synonymously with shadow price. The term “accounting” indicates that the price is not market price. Accounting prices reflect, for example, the economic value of inputs and outputs as opposed to their financial or market value.

Accounts payable

Money owed to an individual or business for goods or services that have been received but not yet paid for.

Accounting rate of return

The ratio of profit before interest and taxation to the percentage of capital employed at the end of a period. Variations include using profit after interest and taxation, equity capital employed, and average capital for the period.

Accounting ratio

This refers to the ratio of the accounting price of a good or service to its market price.

Accounts receivable

Money owed to a business for goods or services that have been delivered but not yet paid for.

Accounts receivable