What Is Extended Normal Costing? Extended normal costing is a business budgeting method that is used to estimate and track production costs over the course of a year. Budgeted costs of production are predetermined by the business’s management, usually at the beginning of the year. When extended normal costing is used, the budgeted costs rather
What Is an Extender Clause? An extender clause is a contractual provision in an exclusive real estate listing agreement. This type of clause protects the listing agent by guaranteeing their full commission in the event that the property sells after the listing agreement has already expired. In order for the agent to qualify and receive
What Is an External Claim? An external claim is a claim against an individual that does not arise out of any relationship one may have to a business in which the individual has an ownership interest. Depending on how the business is owned, the creditor may be able to legally pursue assets of the business to satisfy
What Is External Debt? External debt is the portion of a country’s debt that is borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made. To earn the needed currency, the borrowing country may sell and
What Is an Externality? An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer. An externality can be both positive or negative and can stem from either the production or consumption of a good or service. The costs and benefits can be both private—to
What Are Production Externalities? Production externality refers to a side effect from an industrial operation, such as a paper mill producing waste that is dumped into a river. Production externalities are usually unintended, and their impacts are typically unrelated to and unsolicited by anyone. They can have economic, social, or environmental side effects. Production externalities can
What Is an Extra-Contractual Obligations (ECO) Clause? An extra-contractual obligations (ECO) clause in a reinsurance contract requires a reinsurer to pay for expenses imposed upon the ceding insurer by regulatory, judicial, or governmental organizations. An extra-contractual obligation (ECO) clause specifically applies to losses that are outside of the insurance policies covered under a reinsurance treaty. Understanding Extra-Contractual
What Is an Extra Dividend? An extra dividend, sometimes called a special or irregular dividend, is a one-time dividend paid to a company’s shareholders of record. Unlike most dividends, which are paid at regular intervals and in predetermined amounts, extra dividends are typically announced with little-to-no warning; are usually for significantly larger amounts; are nonrecurring, and are
What Is Extra Expense Insurance? Extra expense insurance is a form of commercial insurance that pays for a policyholder’s additional costs while recovering from a major disruption. Extra expense insurance coverage applies to the period of time between when a business is forced to close temporarily and when it has been restored to normal operation.
What Is an Expansionary Policy? Expansionary, or loose policy is a form of macroeconomic policy that seeks to encourage economic growth. Expansionary policy can consist of either monetary policy or fiscal policy (or a combination of the two). It is part of the general policy prescription of Keynesian economics, to be used during economic slowdowns
