Business Glossary

amount required in an account to earn interest, qualify for special services, or waive service charges. Accounts that fall below the minimum balance may be subject to service charges if the average balance is below that threshold, or if the account falls below that balance at any time. To get a free checking account, for instance, a customer may have to keep a certain amount in the account at all times or maintain an equivalent amount in other accounts. Cost accounting systems may give customers an earnings credit for funds kept on deposit. Others, instead, work with a flat charge per check or account.

way to measure cost behavior. It selects a volume-related cost driver and classifies each account from the accounting records as a variable or fixed cost. The cost accountant then looks at each cost account balance and estimates either the variable cost per unit of cost driver activity or the periodic fixed cost. Account analysis requires a detailed examination of the data, presumably by cost accountants and managers who are familiar with the activities of the company, and the way the company's activities affect costs.

desired balance in a deposit account that meets minimum standards for profitability, or the break-even yield. There are various formulas for pricing deposit accounts to cover servicing costs. If a checking account is priced separately from other deposit accounts, a bank may insist that the customer keep a minimum balance in the account at all times, say $1,500, to qualify for service charge-free checking. Abank may waive service charges for those customers who have a high-balance savings account, for example, a $10,000 money market certificate, or combination of accounts that are kept on deposit, or a compensating balance kept by a corporation.

yield required to cover the cost of bringing to market a new product or banking service. In costaccounting it is the point at which a sale covers the cost of a product or service. Each additional sale brings profit to the bottom line, considering the cost of offering the service, normally the fully loaded cost that includes fixed costs, such as building rent, and equipment costs, and variable costs such as the cost of funds.