. Accounting: (1) Tax-free amount (such as traveling allowance) subtracted from an income to arrive at taxable income. See also deduction. (2) Amount paid to employees as part of their salary package, or to defray their out of pocket expenses incurred on behalf of the firm. (3) Amount deducted from an invoice as an incentive for a large order, or to compensate the buyer for an expense or mistake.

2. Manufacturing: Acceptable increment or wastage included when estimating time or material for a production or other process.

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