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.

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.

operating activities: Transactions and events that enter into the determination of net income.

operating assets: Long-term, or noncurrent, assets acquired for use in the business rather than for resale; includes property, plant, and equipment; intangible assets; and natural resources.

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 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 structure: Lines of authority and responsibility.

other revenues and expenses: Items incurred or earned from activities that are outside, or peripheral to, the normal operations of a firm.

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 that is still being held by 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