Accounting, Business Studies and Economics Dictionary
Objective - This normally refers to statement of specific and measurable time period or other outcomes which are verifiable that tries to get the business to respond better to the circumstances of its environment in order achieve the firms goals. Dependent upon how it is used, goals tend to general in their nature, while objectives tend to be more specific.
Objective probability - Characteristic obtained as a result of repeated experiments or repeated trials rather than on the basis of subjective estimates. It is useful in estimating dollar value, quantity, or other characteristics of a given universe for purposes of making statistical decisions.
Objectives of financial statements – The goals of financial statements are supposed to accomplish. The intent of financial statements is to provide information useful in economic decision making. In particular, the data should be useful in making investment and credit decisions. Financial statements should provide a reliable indication of a company's financial position, operating results, and changes in financial position. Also, statement components and categories should aid in decisions.
Objectivity - Freedom from subjective valuation and bias in making an accounting decision. Objectivity applies to a measurement having supporting evidence. Verifiability exists in that two accountants working independently of each other will come up with similar answers. An example of objectivity is recognising revenue at time of sale because it emanates from an independent external transaction.
Objectivity principle – This principle states that the accounts should be recorded using objective rather than subjective evidence. Objective evidence is taken to mean, evidence that a different individual looking at the same data would arrive at the same conclusion. The principle means accounting entries should be based on the facts and not based on personal individual opinions or their feelings.
Obligation - In business, an obligation refers to a legal duty that requires an entity pay or possibly do something.
Obsolescence – A major factor in depreciation, resulting from technological or market changes. Wear and tear from use and natural deterioration through interaction of the elements are other factors that cause depreciation in assets. It is also a big factor in inventory risk.
Occupational mobility - The ease with which workers can switch from one type of job, with particular skills, to another requiring different skills.
Occupational immobility - The lack of ability or willingness of people to move to other jobs irrespective of location.
OECD - Organization for Economic Co-operation and Development - (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States).
Official reserves - The central government's holdings of foreign currencies.
Off peak - Not in the period of most frequented or getting the heaviest levels of use. This period normally has lower rates e.g. Airfares taken not winter are often off-peak fares.
Offset account - An account that reduces the gross amount of another account to derive a net balance. Accumulated depreciation, which is a contra account to fixed assets to obtain book value, is an example of an offset account. Discount on note payable, which is a reduction of notes payable to derive the carrying value, is another example.
Offsetting error - An error that cancels out another error; also called counterbalancing error.
Off-the-job training - Being trained away from the workplace, usually by specialist trainers.
Oligopoly - A market type in which small numbers of producers compete with each other.
Oligopsony - A market with just a few buyers or employers.
Omitted - To leave out or not done, such as to prevent from being included or considered or accepted.
On line - 1. computer equipment under the control of the central processing unit (CPU). Examples are disk drives and printers. Or 2. linking up one computer to another computer that is in a remote location. This connection is made possible by using the telephone lines. The computers transmit data to each other.
On line data base - The information transmitted by telephone, microwaves, and so on, that may be accessed with a decoding device (called a MODEM) and displayed on a monitor or as a printout. A data base for accountants may consist of information such as tax laws and regulations, accounting practices and footnote references, industry data, financial information on companies, investment information, or economic and political statistics.
On line searching - Is using a computer retrieval system to obtain information from a database such as on the Internet. Now sometimes referred to as Googleing.
One off – An event that occurs only once and is not expected to be repeated, e.g. a one-off sale to a specific customer.
Onerous contract – A contract where the unavoidable costs associated with the meeting the requirements under the contract is greater than the economic benefits or income to be received from completing the contract.
One stop shopping – The opportunity to purchase a variety of products from a single location.
One-way communication - Transmission of a message which does not call for or require a response.
On-the-job training - Watching a more experienced worker doing the job and learning skills while under their supervision.
Open account - 1. account that has a nonzero credit or debit balance. Or 2. credit or charge account that is, an account initiated by a creditor on the basis of credit standing. It may also refer to a balance currently owing due to a credit sale, under mutually agreed upon terms (such as method of payment, trade discounts, delivery date, and quantities).
Open economy- An economy that engages in international trade.
Open book management - A management philosophy that gets all employees involved in increasing financial performance and ensures that all workers have access to operational and financial information necessary to accomplishing performance improvements.
Opening cash (or bank) balance - The amount of cash held by the business at the start of the month operational decisions see business decisions.
Open item - A contracted or scheduled commitment that has not yet been reflected in the accounts but will lead to expenditures at some future date.
Opening entry – An entry or a series of entries usually undertaken upon forming a new enterprise, or new accounts, or a new accounting period. A new enterprise requires opening entries with respect to the owner's interests, assets, and liabilities on the books.
Operating allowance – Is the money or allowance advanced to carry out specific operations.
Operating budget – Is the budget that relates on the budgeted income (profit and loss) statement and the supporting documentation and schedules. An operating budget embraces the impacts of operating decisions. It contains forecasts of sales, net income, the cost of goods sold, selling and administrative expenses, and other expenses. The cornerstone of an operational budget is forecasted sales. Therefore, the sales budgetis the basic building block for the operational budget. Once the sales budget is prepared, then the production budget can be formulated. The operational budget also consists of the ending inventory budget, direct material budget, direct labor budget, factory overhead budget, selling and administrative budget, and budgeted income statement.
Operating decisions - The decisions that involve routine tasks, such as planning production and sales, scheduling personnel and equipment, adjusting production rates, and controlling the quality of production.
Operating income – Refers to the revenue minus cost of sales and other related operating expenses that apply to the day-to-day operational activities of the firm. It does not include items such as interest income, interest expense ,extraordinary items or taxes.
Operating system - Is computer program that allows users to enter and run their software packages i.e. Windows XP.
Operational audit – Is the evaluation made of management's performance and conformity with policies and budgets. The organisation and its operations are analysed, including appraisal of structure, controls, procedures, and processes.
Operational research - A logical and scientific approach to decision making which uses calculations.
Opportunism – The legal behaviour of self-interest seeking whereby party who has information that another other party does not takes advantage of this information. This is different from insider trading which is illegal.
Opportunistic behaviour – Refers to when party takes advantage of knowledge that the another party does not have, in order to further their interests, and fails to tell the other such information.
Opportunity cost - The cost of using resources for a certain purpose, measured by the benefit given up by not using them in their best alternative use. The best alternative forgone.
Opportunity cost approach – (Management) Refers to the decision method in which the concept of opportunity cost is applied to solve a short-term, non routine decision problem. Opportunity cost represents the net benefit lost by rejecting some alternative course of action. Its significance in decision making is that the best decision is always sought, since it considers the cost of the best available alternative not taken.
Optimal currency area - The optimal size of a currency area is the one that maximises the benefits from having a single currency relative to the costs. If the area were increased or decreased in size, the costs would rise relative to the benefits.
Optimal solution - The most profitable or the least costly solution that simultaneously satisfies all the constraints.
Optimism - To expect the best in the issue under consideration.
Option - 1. ability or right to choose a certain alternative. Or 2. right to buy/sell something at a specified price within a specified period of time. If the right is not exercised within the specified time, the option expires.
Ordinary course of business – Refers to the operations of a business that could be normally expected to occur under their day to day operations.
Organic growth - Growth achieved through the expansion of current business activities.
Organisational structure - The levels of management and division of responsibilities within an organisation.
Organisation chart - A diagram which illustrates the structure of an organisation.
Organisation costs – Refers to the amounts of money spent in beginning a business organisation.
Organisation theory - A set of hypotheses that predicts that the substance of a firm's decisions is affected by its size and form of organisation.
Other assets - Refers to the balance sheet category for minor assets not classified under the typical headings (e.g., current assets, intangible asset, and long-term investments). This type of asset may be immaterial in amount relative to total assets. An example is obsolete machinery to be sold.
Output - The goods or services resulting from production. Output depends on the amount of resources and how they are 1 Different amounts and combinations of inputs will lead to different amounts of output. If output is to be produced efficiently, then inputs should be combined in the optimum proportions
Outsource - Is the process of obtaining items or services from a supplier external to the business organisation. These activities may have previously been done within the organisation.
Outsourcing - The contracting out of work to of the businesses that might otherwise have been performed within the organisation.
Outstanding shares – Refers to the number or amount of shares which currently are owned by all a company's investors. Shares that the company may have repurchased or possibly retired are not counted as outstanding stock.
Overdraft - 1. a draft that is greater than the credit balance of the account. Or 2. a facility of revolving credit (usually with a bank) enabling an account holder to write cheques over their account balance for an agreed period of time. A form of short term finance.
Overhaul - To repair and rebuild or to make repairs and/or adjustments to something.
Overhead absorption - Is used to describe the transfer of the value from an asset which is fixed such as a machine to the final item being produced. This is the that indirect costs of a firm can be assigned or attributed to the products/services produced.
Overstated - When something is that is being represented as of greater value than is really true or the items reasonable value.
Overtime- Paid work for working beyond normal working hours.
Overtime ban - A form of industrial action when employees refuse to work longer than their normal working hours
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