Glossary – Accounting
There are 13 names in this directory beginning with the letter O.
Obsolescence
The process of becoming outdated or no longer being economically feasible (often caused by technology advances).
On credit
On account. Goods purchased with terms of net 10 days, net 30 days, or 2/10, net 30 are goods purchased on credit. Goods sold with similar terms are sales on credit.
Opportunity cost
The next best benefit foregone. The opportunity lost. Often measured as the contribution margin given up by not doing an activity.
Order costs
In the EOQ model, order costs are the incremental costs of processing an order of goods from a supplier. Examples of order costs include the costs of preparing a requisition, a purchase order, and a receiving ticket, stocking the items when they arrive, processing the supplier’s invoice, and remitting the payment to the supplier.
Organic growth
The internal growth of a company’s existing businesses. Organic growth excludes the additional sales resulting from acquiring another company.
Organization chart
A diagram depicting a company’s hierarchy or chain of command, its business segments, functions, and departments.
Organization-sustaining activities
Activities that are not specifically associated with a specific product or customer. For example, the costs of an audit and filing information with government agencies are examples of organization-sustaining activities.
Outsourcing
Sending work to another organization instead of processing the work in-house. Often payroll is outsourced to a company that specializes in payroll processing.
Outstanding checks
Checks which have been written, but have not yet cleared the bank on which they were drawn. In the bank reconciliation, outstanding checks are deducted from the balance per bank.
