Accounting Terminology Guide

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Objectivity

Emphasizing or expressing the nature of reality as it is apart from personal reflection or feelings; independence of mind.

Obligations

Any amount which may require payment by an entity at a future time.

Obsolescence

The process of becoming out-of-date.

OCBOA

Consistent accounting basis other than GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) used for financial reporting. Examples include an INCOME TAX BASIS or a CASH BASIS.

Offer

Price at which someone who owns a SECURITY offers to sell it.

Offering Price

Price per share at which a new or secondary distribution of securities is offered for sale to the public.

OPEB

All post-retirement benefits other than pensions, provided by employers to employees.

Open-End Mutual Fund

MUTUAL FUND that does not have a fixed number of shares outstanding, offers new shares to the public, and buys back outstanding shares at market value.

Operating Agreement

Agreement, usually a written document, that sets out the rules by which a LIMITED LIABILITY COMPANY (LLC) is to be operated. It is the LLC equivalent of corporate BYLAWS or a PARTNERSHIP agreement.

Operating Cycle

Period of time between the acquisition of goods and services involved in the manufacturing process and the final cash realization resulting from sales and subsequent collections.

Operating Expense

An EXPENSE other than COST OF GOODS SOLD that is incurred in running a business.

Operating Lease

Type of LEASE, normally involving equipment, whereby the CONTRACT is written for considerably less than the life of the equipment and the lesser handles all maintenance and servicing.

Operating Profit (or Loss)

The difference between the REVENUES of a business and the related costs and expenses, excluding INCOMEderived from a sources other than its regular activities and before income deductions.

Opportunity Cose

Highest price or rate of return an alternative course of action would provide.

Option

Right to buy or sell something at a specified price during a specified time period.

Ordinary Annuity

A series of equal payments made at the end of equal intervals of time, with compound interest on these payments.

Ordinary Income

One of two classes of income (the other being CAPITAL GAINS) taxed under the INTERNAL REVENUE CODE. Historically, ordinary income is taxed at a higher rate than capital gains.

Organization

The act of arranging something in an orderly way.

Organization Expenditures

The costs of organizing a trade or business or for profit activity before it begins active business. A taxpayer may elect to amortize such expenses for a tern no less than 60 months. If the election is not made then the expenses are not deductible and may only be recovered when the business ceases operation or is sold.

Original Cost

In ACCOUNTING, all costs associated with the acquisition of an ASSET.

Other Comprehensive Basis of Accounting (OCBOA)

Consistent accounting basis other than GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) used for financial reporting. Examples include an INCOME TAX BASIS or a CASH BASIS.

Other Post-Retirement Employee Benefit (OPEB)

All post-retirement benefits other than pensions, provided by employers to employees.

Output

An amount of something produced, especially during a given period of time.

Outsourcing

The act or an instance of purchasing essential products or services from another COMPANY.

Outstanding

Not settled or paid.

Outstanding Check

A CHECK that has been written by the drawer and deducted on his or her records but has not reached the bank for payment and is not deducted from the bank BALANCE by the time the bank issues its statement.

Over-the-Counter

Sold to customers at retail and without any special restrictions.

Overhead

Costs of a business that are not directly associated with the production or sale of goods or services.

Overhead Application Rate

Standard rate used to calculate the OVERHEAD cost of a given activity. Activity often measured in LABOR or machine hours.

Owner's Equity

The residual INTEREST in the assets of a business entity that remains after deducting the entity's liabilities.