a fixed interest investment in a company, which has priority for interest payments, generally redeemable after the lapse of a specified time


To debit is to place an entry on the left-hand side of an account. A debit in a liability account makes it smaller. A debit in an asset account makes it larger.


that which is owed. If you borrow money, buy something on credit or receive more money on an account than is owed, you have a “debt”.

debt capital

money from external sources used to finance a business. See also equity capital.


a person or business who owes money


to fail to meet an obligation when due, such as paying a debt.


an order to comply with an obligation. In business, paying on “demand” means that the obligation must be satisfied immediately when requested.

depreciation expense

gradual reduction of the value of a fixed asset and gradual application of this cost to the expenses of a business over the useful life of the asset.

depreciation schedule

a table showing depreciable assets, the year each was purchased, its cost, the percentage by which it is depreciated each year and written down current value.

direct costs

the costs incurred, in addition to fixed costs, as a result of manufacturing a product or providing a service. Direct costs are made up of direct material, direct labour and direct manufacturing or servicing costs.

director’s guarantee

a personal guarantee given by a director of a company that s/he will be personally responsible for a debt or other liability of the company. Usually requested in credit applications, leases, loans and hire purchase agreements.


funds paid out of a business in settlement of obligations.


a deduction made from the normal cost or purchase price.


the word used to describe a cheque, which the bank will not pay, because the customer’s account lacks sufficient funds.


a distribution of the profits of a company among its members or shareholders.


withdrawals of assets (usually cash) from a business by a sole proprietor or a partner.


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