CSEET – COMMON BUSINESS TERMINOLOGIES
CSEET – COMMON BUSINESS TERMINOLOGIES
Revision Notes
How to study this chapter
Do not try to memorise a dictionary.
For CSEET, learn each term in this format:
TERM → SIMPLE MEANING → AREA → KEYWORD
For example:
Debenture → Debt instrument issued by a company → Company/Finance → Borrowed money
1. BASIC BUSINESS TERMINOLOGIES
Term | Simple Meaning |
Business | Activity of providing goods or services for commercial purposes |
Management | Process of planning, organising and controlling resources to achieve objectives |
Marketing | Activities involved in promoting, selling and distributing goods/services |
Market | Place or system where buyers and sellers exchange goods/services |
Profit | Excess of income/revenue over expenses |
Loss | Excess of expenses over income/revenue |
Revenue | Income generated from business activities |
Expense | Cost incurred to earn revenue |
Capital | Money or resources invested in a business |
Investment | Money or resources placed in an asset or business with the expectation of return |
Asset | Resource controlled/owned by a business having economic value |
Liability | Amount or obligation payable by a business |
Debtor | Person who owes money to the business |
Creditor | Person to whom the business owes money |
Turnover | Total value of sales/business transactions during a specified period |
Goodwill | Value arising from reputation, customer loyalty and other advantages of a business |
2. ACCOUNTING & FINANCIAL TERMINOLOGIES
Asset
An asset is an economic resource controlled by a business that has value.
Examples:
Cash
Machinery
Building
Inventory
Receivables
Patents
Liability
A liability represents an obligation payable by the business.
Examples:
Loans
Creditors
Outstanding expenses
Debentures
Remember:
Asset = What business has
Liability = What business owes
Equity
Equity represents the owner's/shareholders' interest in the business after deducting liabilities from assets.
Formula:
Equity = Assets − Liabilities
Working Capital
Working capital represents the funds available for day-to-day business operations.
Formula:
Working Capital = Current Assets − Current Liabilities
Current Asset
An asset expected to be realised, sold or consumed in the normal operating cycle or generally within the relevant short-term period.
Examples:
Cash
Bank balance
Inventory
Trade receivables
Current Liability
An obligation expected to be settled in the normal operating cycle or generally within the relevant short-term period.
Examples:
Trade payables
Outstanding expenses
Short-term borrowings
Book Value
The value of an asset as shown in the books of account after relevant accounting adjustments. It need not be the same as its market value. ICSI specifically gives this distinction in its terminology material.
Example:
Cost of machinery = ₹10 lakhAccumulated depreciation = ₹3 lakh
Book value = ₹7 lakh
Depreciation
A systematic allocation of the depreciable amount of a tangible asset over its useful life.
Simple idea:
Asset loses/use up value over time → Depreciation
Amortisation
Systematic allocation of the cost of an intangible asset over its useful life.
Remember:
Depreciation → Tangible assets
Amortisation → Intangible assets
Capital Expenditure
Expenditure incurred to acquire or improve a long-term asset or provide an enduring benefit.
Examples:
Purchase of machinery
Construction of building
Major improvement of an asset
Revenue Expenditure
Expenditure incurred for the normal day-to-day operation of business.
Examples:
Salaries
Rent
Electricity
Routine repairs
Easy distinction:
Capital expenditure → Creates/improves long-term benefit
Revenue expenditure → Day-to-day operation
Cash Flow
Movement of cash and cash equivalents into and out of a business.
Cash flows are generally classified into:
Operating activities
Investing activities
Financing activities
Break-even Point
The level of sales/output at which:
Total Revenue = Total Cost
At this point:
No Profit + No Loss
3. BANKING TERMINOLOGIES
Bank Rate
A rate determined by the Reserve Bank of India in the context of its monetary policy framework and economic conditions. ICSI's terminology material includes Bank Rate among the commonly used business terms.
Bank Statement
A statement showing transactions and the balance in a bank account over a particular period.
Cheque
A written/electronic banking instrument used to instruct a bank to make payment according to its terms.
Bounced Cheque
A cheque that the bank refuses to honour, for example because of insufficient funds or other valid reasons.
Overdraft
A facility allowing a customer to withdraw more money from an account than the available balance, subject to agreed limits.
Loan
Money borrowed from a bank or other lender which is generally repayable with interest according to agreed terms.
Interest
The amount paid or earned for the use of money.
Collateral
An asset provided as security for a loan or other obligation.
Mortgage
A security interest created over immovable property for securing repayment of a loan or performance of an obligation.
4. COMPANY & CORPORATE TERMINOLOGIES
These are very important for CSEET students.
Company
An incorporated legal entity formed under applicable company law.
Share
A share represents a portion of the share capital of a company.
Shareholder
A person who holds shares in a company.
Equity Share
A share generally carrying ownership interest in the company and rights attached to that class of shares.
Preference Share
A share carrying preferential rights regarding dividend and repayment of capital, subject to the applicable law and terms of issue.
Debenture
A company debt instrument evidencing a debt owed by the company. The Companies Act definition includes debenture stock, bonds and certain other debt instruments of a company.
Easy memory:
Share → Ownership
Debenture → Debt
Dividend
A distribution made by a company to its shareholders out of profits or otherwise in accordance with applicable law.
Director
A person appointed to the Board of Directors of a company.
Promoter
A person who falls within the statutory definition of promoter, which can include someone named as such in specified company documents or someone who has control over the affairs of the company.
Prospectus
A document inviting the public to subscribe for or purchase securities, subject to the statutory definition and requirements.
Private Company
A company which satisfies the statutory requirements applicable to a private company, including restrictions concerning transfer of shares and public invitation, subject to the Companies Act.
Public Company
A company which is not a private company, subject to the requirements of the Companies Act.
Subsidiary Company
A company controlled by another company in the manner prescribed by law, including through control over the Board or voting power.
Holding Company
A company of which another company is a subsidiary.
Easy memory:
Holding company → Controls
Subsidiary → Controlled
Associate Company
A company over which another company has significant influence, but which is not its subsidiary.
Related Party
A person/entity having a relationship with a company as specified under applicable law—for example, certain directors, key managerial personnel and specified companies/entities.
Financial Statement
Financial statements provide information about the financial position and performance of an entity. For companies, the statutory definition includes items such as the balance sheet, statement of profit and loss, cash flow statement and, where applicable, statement of changes in equity and notes.
Financial Year
For a company, the financial year is generally the period ending on 31 March, subject to the specific provisions and permitted exceptions under the Companies Act.
5. CAPITAL MARKET TERMINOLOGIES
Securities
Financial instruments covered by the applicable securities laws, including shares and other specified instruments.
Stock Exchange
A recognised platform/market for trading securities.
Securities Market
A market in which securities such as shares, bonds and other financial instruments are issued and/or traded.
IPO – Initial Public Offer
The first public offering of securities by a company.
Remember:
IPO = Company enters the public market
FPO – Follow-on Public Offer
A subsequent public offer of securities by a company that has already made a public issue.
Bonus Shares
Additional shares issued to existing shareholders out of eligible reserves, subject to applicable law.
Rights Issue
An issue of shares offered to existing shareholders in proportion to their existing holding, subject to applicable law.
Market Capitalisation
The total market value of a company's outstanding shares.
Simplified formula:
Market Capitalisation = Market Price per Share × Number of Outstanding Shares
6. ECONOMIC TERMINOLOGIES
Inflation
A sustained increase in the general price level of goods and services, reducing purchasing power.
Example:
If ₹100 today buys what ₹90 could buy earlier, purchasing power has declined.
Deflation
A sustained decline in the general price level of goods and services.
GDP
Gross Domestic Product
The monetary value of final goods and services produced within a country's geographical boundaries during a specified period.
Per Capita Income
Average income per person.
Simplified formula:
National Income ÷ Population
Fiscal Policy
Government policy relating mainly to taxation, public expenditure and borrowing.
Monetary Policy
Policy concerning money supply, interest rates and credit conditions, primarily undertaken by the central bank.
Recession
A significant decline in economic activity over a period.
Boom
A period of strong economic activity, often associated with rising production, income and employment.
7. TAXATION TERMINOLOGIES
Direct Tax
A tax imposed directly on a person/entity and generally borne by the person on whom it is imposed.
Example:
Income Tax.
Indirect Tax
A tax imposed on goods/services or transactions, where the economic burden may be passed on to another person.
Example:
GST.
GST
Goods and Services Tax
A comprehensive indirect tax framework on the supply of goods and services.
GSTIN
Goods and Services Tax Identification Number
A unique identification number allotted to a registered taxpayer under GST.
Input Tax Credit
Credit of eligible GST paid on inward supplies against GST liability on outward supplies, subject to applicable conditions.
Easy memory:
Tax paid on purchases → eligible credit → used against output tax
Tax Deducted at Source – TDS
Tax deducted by a person making certain specified payments and deposited with the government, subject to the applicable provisions.
PAN
Permanent Account Number
A unique tax identification number issued by the Income Tax Department.
8. INSURANCE TERMINOLOGIES
Insurance
A contract under which an insurer provides financial protection against specified risks in return for consideration/premium, subject to policy terms.
Insurer
The insurance company or entity providing insurance cover.
Insured
The person/entity whose risk is covered under an insurance policy.
Premium
The amount paid to obtain/maintain insurance coverage.
Policy
The document/contract containing the terms and conditions of insurance.
Claim
A request made to the insurer for payment/benefit under the policy.
Sum Insured
The amount specified as the insured amount, subject to the terms of the policy.
9. BUSINESS LAW TERMINOLOGIES
Contract
An agreement enforceable by law.
Easy formula:
Agreement + Enforceability by law = Contract
Consideration
Something of value given, promised or done at the desire of the promisor, subject to the rules of contract law.
Breach of Contract
Failure to perform a contractual obligation as required by the contract.
Indemnity
A promise to compensate another for loss, subject to the applicable legal requirements.
Guarantee
A contract involving a promise to perform the promise or discharge the liability of a third person in case of that person's default, subject to the law.
Arbitration
A method of dispute resolution in which the dispute is referred to an arbitrator/arbitral tribunal for decision according to applicable law.
Litigation
The process of resolving a dispute through court proceedings.
Case Law
Principles derived from judicial decisions which may serve as authorities in subsequent cases, subject to the applicable rules of precedent. ICSI's material specifically includes case law among common business/legal terminology.
10. NEGOTIABLE INSTRUMENT TERMINOLOGY
These terms are particularly useful for CSEET.
Promissory Note
A written instrument containing an unconditional undertaking to pay a certain sum of money to, or to the order of, a specified person or bearer, as defined by the Negotiable Instruments Act.
Bill of Exchange
A written instrument containing an unconditional order directing a person to pay a certain sum of money to or to the order of a specified person or bearer.
Cheque
A bill of exchange drawn on a specified banker and payable on demand, subject to the statutory definition.
Endorsement
Signing an instrument for the purpose of negotiation/transfer.
Holder
A person entitled in his own name to possession of the instrument and to receive or recover the amount due on it, subject to the applicable law.
Acceptance
Assent given to a bill of exchange by the person upon whom the bill is drawn.
11. MANAGEMENT TERMINOLOGIES
Outsourcing
Contracting selected business functions to an outside organisation/person.
Example:
A company appoints an external agency to handle payroll processing.
Downsizing
Planned reduction in the number of employees, usually to reduce costs or restructure the organisation.
Telecommuting
Working remotely, often using computers and communication technology.
Headquarters
The main administrative centre of an organisation.
Delegation
Assignment of authority/responsibility to another person to perform specified tasks, while the manager retains overall accountability.
Leadership
The ability to influence and guide people towards achieving organisational objectives.
Motivation
Factors or processes that encourage people to act towards achieving objectives.
12. MARKETING TERMINOLOGIES
Brand
A name, symbol, design or identity associated with a product/service or organisation.
Branding
Process of creating and developing a distinctive identity for a product, service or organisation.
Advertisement
A paid form of communication intended to inform or persuade an audience about a product, service, idea or organisation.
Consumer
A person who purchases or uses goods/services.
Customer
A person or organisation that purchases goods/services from a business.
Target Market
The specific group of customers at whom a product or marketing campaign is directed.
Market Research
Systematic collection and analysis of information about customers, competitors and markets.
13. INTERNATIONAL BUSINESS TERMINOLOGIES
Import
Purchase or bringing of goods/services from another country into the domestic market.
Export
Sale or supply of goods/services from the domestic country to another country.
Foreign Direct Investment – FDI
Investment by a person/entity of one country in a business/entity in another country involving a lasting interest/control or significant influence, depending on the applicable framework.
Foreign Portfolio Investment – FPI
Investment by foreign investors in financial securities of another country, generally without the type of controlling interest associated with FDI.
Remember:
FDI → Direct/lasting business interest
FPI → Portfolio investment in securities
Exchange Rate
The value of one currency expressed in terms of another currency.
Example:
₹83 = US$1
The rate changes according to market and policy conditions.
14. INTERNATIONAL BUSINESS EXPRESSIONS
These are useful for vocabulary-based questions.
Term | Meaning |
Bona fide | Genuine; in good faith |
De facto | In fact |
De jure | According to law |
Per annum | Per year |
Per capita | Per person |
Vice versa | In the reverse order/other way around |
Status quo | Existing state of affairs |
Ad hoc | For a particular purpose |
Pro rata | In proportion |
Et cetera (etc.) | And so on |
i.e. | That is |
e.g. | For example |
Prima facie | At first sight/on the face of it |
15. IMPORTANT MODERN BUSINESS TERMS
The ICSI material also reflects modern business terminology, so students should be familiar with terms such as:
Start-up
A newly established business, generally designed to develop and scale a business model.
E-commerce
Buying and selling goods/services through electronic networks, especially the Internet.
E-business
Use of digital technologies to conduct and manage business activities.
FinTech
Technology-based innovation in financial services.
E-governance
Use of information and communication technology in governance and public services.
Artificial Intelligence – AI
Technology that enables machines/software to perform tasks involving capabilities associated with human intelligence.
Chatbot
Software designed to interact with users through automated conversation.
Blockchain
A distributed digital ledger technology in which transactions/data are recorded in linked blocks.
⭐ 50 TERMS STUDENTS SHOULD DEFINITELY REMEMBER
For quick revision, I would ask students to memorise these first:
Business
Management
Marketing
Profit
Loss
Revenue
Expense
Capital
Asset
Liability
Equity
Working Capital
Book Value
Depreciation
Capital Expenditure
Revenue Expenditure
Break-even Point
Bank Rate
Overdraft
Collateral
Share
Debenture
Dividend
Promoter
Prospectus
Holding Company
Subsidiary Company
Associate Company
Related Party
Financial Statement
IPO
Rights Issue
Bonus Shares
Inflation
GDP
Fiscal Policy
Monetary Policy
GST
TDS
PAN
Insurance
Premium
Contract
Consideration
Breach of Contract
Indemnity
Guarantee
Arbitration
FDI
FPI
🧠 VERY IMPORTANT CONFUSING TERMS
These are excellent for CSEET MCQs.
1. Share vs Debenture
Share | Debenture |
Ownership interest | Debt |
Shareholder | Debenture holder |
Dividend | Interest |
Generally variable return | Generally fixed contractual return |
Share capital | Borrowed/debt capital |
Memory:
SHARE = OWNERDEBENTURE = CREDITOR
2. Capital Expenditure vs Revenue Expenditure
Capital → Long-term benefit
Revenue → Routine/day-to-day expenditure
3. FDI vs FPI
FDI → Direct business investment
FPI → Investment in financial securities
4. Holding Company vs Subsidiary
Holding → Controls
Subsidiary → Controlled
5. Debtor vs Creditor
Debtor → Owes us
Creditor → We owe
6. Asset vs Liability
Asset → What we have
Liability → What we owe
7. Profit vs Revenue
Revenue = Income generated
Profit = Revenue/Income − Expenses
A company can have high revenue but low profit if its expenses are high.
8. Book Value vs Market Value
Book Value → Value recorded in books
Market Value → Value at which the asset/security may be valued in the market
ICSI's terminology material specifically highlights that book value is not necessarily market value.
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