What Is a Perpetual Inventory System? A perpetual inventory system is based on an accounting method known as perpetual inventory that continuously records inventory changes in real-time with computerized point-of-sale systems, removing the need for physical inventory checks. It provides a highly detailed view of changes in inventory with immediate reporting of the amount of
What Does Perpetuity Mean in Finance? A perpetuity is a security that pays for an infinite amount of time. In finance, perpetuity is a constant stream of identical cash flows with no end. The concept of perpetuity is also used in several financial theories, such as in the dividend discount model (DDM). Key Takeaways A
What Is a Personal Exemption? The personal exemption was a federal income tax break up until 2017. The Tax Cuts and Jobs Act of 2017 eliminated the personal exemption for tax years 2018 to 2025. The exemption was earmarked for a subsistence level of income, which was untaxed and gave an exemption for each person
What Is a Pension Risk Transfer? A pension risk transfer occurs when a defined benefit pension provider offloads some or all of the plan’s risk (e.g., retirement income liabilities to former employee beneficiaries). The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan early (buying out employees’ pensions) or
What Is a Pension Shortfall? A pension shortfall is a situation where a company offering employees a defined benefit (DB) plan does not have enough money to meet the obligations of the pension fund. A pension shortfall typically occurs because the investments selected by the pension manager did not live up to expectations. A pension
What Is Pent-Up Demand? Pent-up demand refers to a situation where demand for a service or product is unusually strong. Economists generally use the term to describe the general public’s return to consumerism following a period of decreased spending. The idea is that consumers tend to hold off making purchases during a recession, building up a backlog
What Is the People’s Bank of China? The People’s Bank of China (PBoC) is the central bank of the People’s Republic of China and is located in Beijing. The PBoC has many functions in China’s monetary system, including: Creating and enforcing laws, rules, and regulationsCreating and implementing monetary policyManaging the State treasuryRegulating the country’s financial
What Is Per Diem Interest? The term per diem interest refers to the interest charged on a loan on a daily basis—most often on mortgages. Part of the administrative process, this kind of interest is calculated between the closing date of the loan and the time at which the mortgage loan actually begins. Per diem
What Is Per Capita? Per capita is a Latin term that translates to “by head.” Per capita means the average per person and is often used in place of “per person” in statistical observances. The phrase can be used for almost any kind of population description but is common when discussing economic data. This could
What Is GDP Per Capita? Gross domestic product (GDP) per capita is a financial metric that breaks down a country’s economic output per person and is calculated by dividing the GDP of a nation by its population. Key Takeaways Gross domestic product per capita measures a country’s economic output per person and is calculated by
