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obsolescence
The term for an asset's becoming useless due to a change in technology, design, or legal requirements as opposed to uselessness caused by wear and tear.


open line of credit
An unsecured account allowing you to transact business under a company's normal credit terms. A privilege given to those with a good credit rating.


opening balance
In bookkeeping (accounting), the balance of each account at the beginning of an accounting period. For example, the balance in the bank account on January 1st of a new accounting year.


Opening entry
An accounting entry to reflect the assets, liabilities, and capital (equity) account balances of a new company. For example, a new business might be started by an owner depositing $10,000 in the business bank account. The opening entry would be a debit of $10,000 to cash in bank and a credit to capital (equity) for $10,000. If the $10,000 was borrowed, the credit would be to notes payable.


operating expense (cost)
An expense that occurs in the course of the regular business activities of the company.
See also nonoperating expense.


operating statement
See income statement.


opinion
In accounting, the written report by an auditor attesting to the fairness of the information in the company's financial statements. A qualified opinion means that the auditor takes exception to specified items in the statements. An unqualified opinion means that the financial statements follow generally accepted accounting principles (GAAP).


option
An agreement, usually in writing, giving a person the right to buy or sell something for an agreed upon price on or before a certain date.


organizational cost (expense)
The cost of setting up a business before any actual business is transacted. The tax law allows you to amortize (write off) these costs over a period of not less than 60 months.


out-of-pocket expense
Incidental cash expenditures in business, often minor while traveling. Also a term used to describe expenses while doing charitable work. Out-of-pocket expenses for charitable purposes are tax deductible.


outstanding stock (issued stock)
Stock of a corporation in the hands of investors.


overhead
Expenses that are not directly related to the products or services sold. Also known as indirect costs since they do not vary directly with sales volume. Examples include such things as utilities and janitorial services.


over-the-counter (OTC)
Security transactions that do not take place with an established stock exchange; the sale of unlisted securities.


owner's equity
See net assets and net worth.

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