Obsolescence: The decrease in the value of fixed assets, resulting
from economic, social, technological or legal changes.
Open Transaction: A transaction that is not completed at the
end of the accounting period; a purchase that has not yet been paid for or a
sale where payment is yet to be collected when the accounting period ends.
Opening the Books: Every time a business closes the books
for a year, it opens a new set. The new set of books will be empty, therefore
the balances from the last balance sheet must be copied into them (via journal
entries) so that the business is ready to start the new year.
Operating Activities: Transactions and events that enter into
the determination of net income.
Operating Assets: Long-term, or non-current, assets acquired
for use in the business rather than for resale; includes property, plant, and
equipment; intangible assets; and natural resources.
Operating Budget: The plan for the allocation of resources
to each department for the budget period (usually one year).
Operating Expenses: Proprietary fund expenses related directly
to the fund's primary activities.
Operating Income: The excess of proprietary fund operating
revenues over operating expenses.
Operating Lease: A simple rental agreement.
Operating Leverage: The extent to which fixed costs are part
of a company's cost structure; the higher the proportion of fixed costs, the
faster income increases or decreases with sales volumes.
Operating Performance Ratio: An overall measure of the efficiency
of operations during a period; computed by dividing net income by net sales.
Operating Revenues: Proprietary fund revenues directly related
to the fund's primary activities. They consist primarily of user charges for
goods and services.
Operating System: The operating system of a computer is the
software that coordinates the various applications and allows communication
among the different subsystems of the computer.
Operations Fund: A master fund established for the purpose
of accounting for all resources not accounted for in another fund.
Organizational Structure: Lines of authority and responsibility.
Ordinary Share: This is a type of share issued by a limited
company. It carries the highest risk but usually attracts the highest rewards.
Original Book of Entry: A book which contains the details
of the day to day transactions of a business.
Other Revenues and Expenses: Items incurred or earned from
activities that are outside, or peripheral to, the normal operations of a firm.
Outstanding Checks: Checks that have been written, recorded
and given to the payee but has not been received by the bank, paid and returned
(usually with the bank statement).
Outstanding Stock: Issued stock that is still being held by
Overdraft: The amount by which checks, drafts or other demands
for payments on a bank exceed the amount of the credit against which they are
Overheads: These are the costs involved in running a business.
They consist entirely of expense accounts (e.g. rent, insurance, petrol, staff
Owners' Equity (Net Assets): The ownership interest in the
assets of an entity; equal total assets minus total liabilities.