IBP JAIBP Stage I key terms

The medium used to carry a message from sender to receiver, such as face-to-face speech, a letter, email, or a telephone call. Choice of channel affects clarity, speed, and record-keeping.

The receiver's response that tells the sender whether the message was understood as intended. Without feedback, a sender cannot confirm comprehension or correct misunderstanding.

Any interference that distorts or blocks a message between sender and receiver, including physical sounds, poor handwriting, jargon, emotional bias, or a faulty network connection.

The informal, unofficial network through which information and rumours spread among staff outside formal channels. Managers cannot eliminate it but can monitor and use it to gauge morale.

Message flow from senior levels to junior levels, covering instructions, policies, appraisals, and organisational news. It is the most common formal direction but risks distortion as it passes through layers.

Message flow from subordinates to superiors, including reports, suggestions, grievances, and feedback. It gives management information for decisions but is often filtered by fear of consequences.

A deliberate listening approach in which the receiver concentrates, avoids interrupting, asks clarifying questions, and restates the speaker's meaning to confirm understanding.

A short internal written message used within an organisation to inform, request, or instruct. It normally states purpose, background, and action required, and omits the salutation of an external letter.

A structured document presenting facts, analysis, and recommendations on a specific issue so that a reader can make a decision. It usually includes terms of reference, findings, conclusions, and recommendations.

A brief opening section of a report that condenses the purpose, key findings, and main recommendations so a busy reader can grasp the whole document quickly.

The fundamental relationship stating that assets equal liabilities plus owner's equity. Every transaction changes at least two elements while keeping the two sides of the equation equal.

A recording system in which every transaction is entered as an equal debit and credit in at least two accounts, so total debits always equal total credits.

A list of all ledger account balances at a given date, split into debit and credit columns, used to check that total debits equal total credits before preparing financial statements.

A temporary account used to hold a difference revealed when a trial balance does not agree, pending investigation and correction of the underlying error.

The principle that revenue is recognised when earned and expenses when incurred, regardless of when cash is received or paid. It underlies matching of income with related costs.

The rule that expenses should be reported in the same period as the revenues they helped generate, so that profit for a period is measured fairly.

An amount paid in advance for a benefit not yet consumed, such as rent for the coming quarter. It is an asset at the reporting date and is later charged to expense.

A cost incurred during the period but not yet paid or invoiced, such as unpaid salaries at month end. It is recorded as a liability and charged to the current period's profit.

The systematic allocation of the cost of a non-current asset over its useful life, reflecting consumption of benefit. It is an expense, not a cash payment or a fall in market value.

A depreciation method charging an equal annual amount, calculated as cost less residual value divided by useful life. It suits assets whose benefit is consumed evenly.

The carrying amount of an asset in the accounting records, equal to its cost less accumulated depreciation. It may differ substantially from market or resale value.

The value of the next best alternative forgone when a choice is made. It is central to economic reasoning because scarce resources used for one purpose cannot be used for another.

The condition in which resources are limited relative to unlimited human wants. It forces choices and underlies the study of how goods and services are allocated.

Decision-making by comparing the extra benefit of one more unit with its extra cost. Rational agents act when marginal benefit exceeds marginal cost, which explains pricing and output choices.

A measure of how strongly quantity demanded responds to a change in price or income. Demand is elastic when the response is proportionally large and inelastic when it is small.

The principle that, other things equal, quantity demanded of a good falls as its price rises and rises as its price falls. This produces a downward-sloping demand curve.

A sustained rise in the general price level, reducing the purchasing power of money. It is commonly measured by changes in a consumer price index.

A weighted index tracking the cost of a fixed basket of goods and services bought by households. Its percentage change is the usual headline measure of inflation.

Actions by a central bank to influence money supply, credit, and interest rates in pursuit of price stability or other objectives, usually through policy rates and open market operations.

The proportion of deposits that banks must hold as reserves with the central bank. Raising it reduces funds available for lending and tends to tighten credit.

Interest calculated only on the original principal for the whole period, using principal times rate times time. It ignores interest already earned.

Interest calculated on principal plus previously accumulated interest, so the balance grows geometrically over time. More frequent compounding raises the effective annual rate.

The value today of a future sum or stream of cash flows, found by discounting at a chosen rate. It allows comparison of amounts occurring at different dates.

A series of equal payments made at regular intervals, such as monthly loan instalments or pension receipts. Its present or future value can be computed with standard formulas.

Three measures of central tendency: the arithmetic average, the middle value of ordered data, and the most frequent value. Each summarises a dataset differently and is affected differently by outliers.

A measure of dispersion showing the typical distance of observations from the mean. A large value indicates widely spread data and greater variability or risk.

A number between zero and one expressing the likelihood that an event occurs. Probabilities underpin risk assessment, sampling, and expected-value calculations in banking.

The process by which a bank identifies and verifies customers, understands their business and risk profile, and monitors activity to prevent money laundering and fraud.

Laws, rules, and procedures requiring financial institutions to detect, report, and deter attempts to disguise the proceeds of crime as legitimate funds.

A scheme that protects depositors up to a stated limit if a bank fails, typically funded by premiums from member banks and backed by a designated authority.

The danger that a bank cannot meet obligations as they fall due without costly borrowing or forced sale of assets, often triggered by sudden deposit withdrawals.