Caisse populaire See Credit union.

Capital The amount of money owner(s) have invested in the business (including profits that are not taken out). Also called equity, owners’ equity, or shareholders’ equity.

Capital asset A possession, such as a machine, which can be used to make money and has a reasonably long life, usually several years.

Capital costs Cost involved in the acquisition of fixed assets. Hence, they are “capitalized,” showing up on the balance sheet and depreciated (expensed) over their useful life.

Capital equipment Equipment which you use to manufacture a product, provide a service, or use to sell, store and deliver merchandise. Such equipment will not be sold in the normal course of business, but will be used and worn out or be consumed over time as you do business.

Capital gain Increase in the value of an asset that produces a profit if the asset is sold.

Capital requirement The amount of money needed to establish a business.

Capital stock The money invested in a business through founders’ equity and shares bought by stockholders.

Cash-based accounting The opposite of accrual accounting. Income and expenditures are recorded at the time they are received and paid. Not commonly used.

Cash discount An incentive provided by vendors of merchandise and services to speed up collection of accounts receivable. The common discount is 2% on payment within 10 days versus the total payment in 30 days.

Cash flow The flow of cash in and out of a company. Its timing is usually projected month by month to show the net cash requirement during each period.

Cash flow forecast A schedule of expected cash receipts and disbursements (payments). It highlights expected shortages and surpluses, and is essential to good cash management. Important also in negotiating loans.

Cash poor A situation in which a profitable business runs out of cash, usually because it is growing at a rate that cannot be supported by profit alone.

Casualty insurance Insurance other than accident and life insurance: fire, theft, general liability.

Certificate of origin A certification of the country where the product was made.

Certified cheque A cheque bearing a guarantee from the signer’s bank that funds have been reserved to cover it.

Channel of distribution The physical means of conveying goods from producer to wholesaler to retailer to final consumer. See Distribution network.

Chartered bank In Canada, a bank created by its own Act of Parliament. The federal government defines and regulates its activities. Other financial institutions (such as credit unions and trust companies) may provide banking services, but only chartered banks may borrow from the Bank of Canada.

Chattel mortgage A charge over goods or equipment of a movable nature as opposed to real estate. This document must be registered with the provincial government.

CIF (Cost, Insurance, Freight) The exporter pays the cost of the goods, cargo insurance, and all transportation charges to the named point of destination.

Codicil A change or addition to a will.

Collateral Assets placed by a borrower as security on a loan.

Collection period The average number of days it takes a company to collect receivables. See also Aging.

Collective agreement A contract between employees (through their union) and employer that states the rights and obligations of both sides.

Commercial invoice Prepared by the exporter or the forwarder. It is needed by the buyer to show ownership and arrange for payment to the exporter.

Common carrier A shipping or transport business whose service is by law available to all customers at the same price.

Common law The precedents established by previous court decisions, which have all the force of written statutes unless Parliament passes a law to the contrary.

Competition A market in which rival sellers are trying to gain extra business at one another’s expense and thus are forced both to be as efficient as possible in their service and to hold their prices down as much as possible.

Computer virus A dangerous program can delete or scramble data or shut down your computer.

Conditional sale A sale made but not final until certain acts or events take place.

Consignment Sale of goods through a third party whereby ownership of the goods remains in the name of the supplier until the goods have been sold, at which time the seller isindebted to the supplier.

Consortium A group of companies involved in a joint venture to the benefit of all. Controlled by law in domestic ventures, encouraged for export schemes.

Consular Invoice May be required by certain foreign governments, to have tighter control over their imports. A consular invoice requires approval of that country’s consulate in Canada and frequently involves a fee.

Consumer sovereignty The free-market assumption that it is consumers who, through their power to choose how to spend their money, determine what shall be produced and in what quantity.

Contingencies A reserve for unforeseen costs or circumstances. All financial projections should provide an allowance for contingencies.

Contract An agreement regarding mutual responsibilities between two or more parties. In business law, a contract exists when there has been a meeting of minds, whether the contract is written or oral. However, a contract should be clear and in written form to protect your interests.

Controllable expenses Those expenses that can be controlled or restrained by the businessperson. Some of the costs of doing business can be postponed or spread out over a longer period of time.

Copyright The legal registration and ownership of the product of a writer, painter, singer, musician, choreographer, photographer or other original creator. The owner of a copyright owns all rights to use the copyrighted material. Copyright laws are subject to international treaties.

Corporation A business comprised of one or more individuals treated by the law as a separate legal entity. Liability is limited to the assets of the corporation. See Limited company.

Co-signers Joint signers of a loan agreement, pledging to meet the obligations in case of default. When you ask someone to co-sign a note, you are asking them to fully assume a debt with you if you can’t pay it back. They guarantee the loan will be paid back, and the lender can take legal action against them if they refuse to pay.

Cost of goods sold The direct costs of acquiring and/or producing an item for sale. Excludes any overhead or other indirect expenses.

Cost of merchandise inventory Cost of purchase plus ordering/receiving costs plus holding costs.

Costing (or cost accounting) The procedure concerned with attributing appropriate cost elements to an activity or a product.

Cost-plus agreement An agreement or contract to provide goods or service at a price consisting of the total cost of providing it plus an agreed amount over. The full sales price is thus unknown to both parties when the agreement is made.

Countertrade A generic term encompassing export transactions where a sale to the purchaser is conditional upon a reciprocal purchase or undertaking by the exporter. Forms of these may include counterpurchase, barter, compensation, or offsets.

Countervailing duties Duties imposed to cancel the effect of subsidies by foreign governments on the prices of imported goods.

Credit Credits and debits are used in bookkeeping to record transactions. To credit is to plan an entry on the right side of an account. A credit in an asset account makes it smaller. A credit in a liability account makes it larger. Another definition: The business owner’s reputation for prompt payment of obligations, as in “a good credit rating.”

Credit bureau A business whose product is information, which it sells, on the credit transactions and relevant personal information of individual people, as well as companies.

Credit union A cooperative bank. Takes deposits and makes loans in the usual way, but is owned by and run for the benefit of its members.

Creditor One to whom money is owed.

Current assets Cash or other items that will normally be turned into cash within one year (accounts receivable, inventory and short-term notes), and assets that will be used up in the operation of a firm within one year.

Current debt A debt or liability payable within a given accounting cycle. Interest on loans and suppliers’ bills are current debt.

Current liabilities Amounts owed that will ordinarily be paid by a firm within one year. Such items include accounts payable, wages payable, taxes payable, the current portion of a long-term debt and interest, and dividends payable.

Current ratio Current assets compared to current liabilities. Used as an indication of liquidity. It is the measure of the cash or near cash available for the running of a business. See Working capital.

Customer profile A description of the key characteristics of the people who buy your products or services.

Customs documentation charges Special documents required by some countries to identify the origin and/or value of the shipment.

Customs invoice Prepared by exporter or forwarder, this is a copy of the seller’s commercial invoice, describing the goods bought. Customs invoices are used for import clearances and, occasionally, vary from
commercial invoices.