What is a Franchisee? A franchisee is a business that operates under an existing business’s trademarks. They purchase the right to use a parent company’s brands, material, and other knowledge to sell the same goods and operate under the same standard as the original business. Franchisees become independent operators and owners of franchises, which are…
What is a Deferred Profit Sharing Plan (DPSP)? A Deferred Profit Sharing Plan (DPSP) is a compensation plan wherein employers share a part of their profits with employees. Under the DPSP scheme, employees are entitled to get a share of the profits of the company. However, the amount thus received is not immediately given to…
What is a Deficit? The literal meaning of the word deficit is a loss or shortfall. In terms of finance, deficit refers to a shortfall of certain economic resources, mostly money. An individual runs a deficit if they spend more money than what they earn in a month. When a government spends more money than…
What is Electronic Filing (E-Filing)? Electronic filing, or e-filing, refers to the process of filing one’s taxes electronically, using online software approved by the relevant tax authority of the respective country. E-file is sometimes restricted to certain professionals and/or businesses with a minimum annual income cap. Whether individuals, small businesses, and other professionals are allowed…
What are E-mini Futures? E-mini futures, or more commonly known as e-minis, is a futures contract. The difference is that it is traded electronically, hence the name e-mini. It is also referred to as e-mini because it is a part or a fraction of the total value of an underlying standard futures contract, hence the…
What is Delivery Versus Payment (DVP)? Delivery versus payment (DVP) is a method of settlement for specifically the securities market. It basically guarantees the transfer of securities only after payment is made. It requires the buyer to fulfill their payment obligations before or immediately at the time of the delivery of the purchased security/securities. The…
What is Disclosure? Disclosure, in financial terms, basically refers to the action of making all relevant information about a business available to the public in a timely manner. What Does “Relevant Information” Mean? Relevant information about a business refers to any and every piece of information, including facts, figures, dates, procedures, innovations, and so on,…
What is a Drawing Account? A drawing account is a financial account that essentially records owners’ drawings, i.e., the assets, mainly including money, that are withdrawn from a business by its owner(s) for their personal use. What Constitutes a “Drawing” from the Business? The definition of the drawing account includes assets, and not just money/cash,…
What is Due From Account? Due from account is a receivable account in the general ledger that records funds that are owed to the business. The account is normally used when amounts are owed between related companies. Features of Due from Account Due from account is characterized by the following features: 1. Asset account Due…
What is Exercise Price? The exercise price within an option is the price at which the holder is capable of purchasing the underlying asset. If the market price of the asset is above the exercise price, the holder is capable of purchasing the asset at a discount relative to what the market is offering; thereby,…
