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Superglossary - Accounting Category: Economy and Finance > Accounting Date & country: 16/12/2013, USA Words: 614

Operating Performance Ratio
An overall measure of the efficiency of operations during a period

Opportunity Cost
The opportunity cost of a choice is the value of the best alternative given up.

Optimal Asset Utilization (OAU)
A supply-chain metric to gauge the right speed for asset turnover. Operational Asset Utilization (OA

Ordinary Share
This is a type of share issued by a limited company. It carries the highest risk but usually attract

Organizational Structure
Lines of authority and responsibility.

Original Book Of Entry
A book which contains the details of the day to day transactions of a business (see Journal ).

Other Revenues And Expenses
Items incurred or earned from activities that are outside, or peripheral to, the normal operations o

Outstanding Stock
Issued stock that is still being held by investors.

Overdraft
Lack of sufficient funds to cover the full amount of a check.

Overdraft Protection
Procedure agreed upon by an account holder and a bank in advance to transfer funds from a savings or

Overheads
These are the costs involved in running a business. They consist entirely of expense accounts (eg. r

Owners Equity (Net Assets)
The ownership interest in the assets of an entity

Paid-Up Share Capital
The value of issued shares which have been paid for. See Called-up Share capital.

Par-Value Stock
Stock that has a nominal value assigned to it in the corporation's charter and printed on the face o

Parent Company
A company that owns or maintains control over other companies, known as subsidiaries, which are them

Pareto Optimum
An economic theory by Vilfredo Pareto. It states that the optimum allocation of a society's resource

Partnership
An association of two or more individuals or organizations to carry on economic activity.

Partnership Agreement
A legal agreement between partners

Patent
An exclusive right granted for 17 years by the federal government to manufacture and sell an inventi

Pay On Delivery
The buyer pays the cost of the goods (to the carrier) on receipt of them.

Payee
The person (entity) to whom payment on a note is to be made.

Payroll Deduction
An amount subtracted from a paycheck as the government requires or the employee requests. Mandatory

PE (Price Earning) Ratio
An equation which gives you a very rough estimate as to how much confidence there is in a company's

Pension Plan
A contract between a company and it employees whereby the company agrees to pay benefits to employee

Periodic Inventory
A Periodic Inventory is one whose balance is updated on a periodic basis, ie. every week/month/year.

Periodic Inventory Method
A system of accounting for inventory in which cost of goods sold is determined and inventory is adju

Perpetual Inventory
A Perpetual Inventory is one whose balance is updated after each and every transaction. See Inventor

Perpetual Inventory Method
A system of accounting for inventory in which detailed records of the number of units and the cost o

Personal Accounts
These are the accounts of a business's customers and suppliers. They are usually held in the Sales a

Petty Cash
A small amount of money held in reserve (normally used to purchase items of small value where a cheq

Petty Cash Fund
A small amount of cash kept on hand for making miscellaneous payments.

Petty Cash Slip
A document used to record petty cash payments where an original receipt was not obtained (sometimes

Physical Safeguards
Physical precautions used to protect assets and records, such as locks on doors, fireproof vaults, p

Point Of Sale (POS)
The place where a sale of goods takes place, eg. a shop counter.

Post-Closing Trial Balance
A listing of all real account balances after the closing process has been completed

Posting
The process of transferring amounts from the journal to the ledger.

Pre-Payments
One or more accounts set up to account for money paid in advance (eg. insurance, where part of the p

Preemptive Right
The right of current stockholders to purchase additional shares of stock in order to maintain their

Preference Shares
This is a type of share issued by a limited company. It carries a medium risk but has the advantage

Preferred Stock
A class of stock that usually provides dividend and liquidation preferences over common stock.

Premium On Stock
The excess of the issuance (market) price of stock over its par or stated value.

Prepaid Expenses
Payments made in advance for items normally charged to expense.

Present Value Of $1
The value today of $1 to be received or paid at some future date given a specified interest rate.

Present Value Of An Annuity
The value today of a series of equally spaced, equal-amount payments to be made or received in the f

Price Change Accounting
Accounting for the value of assets, stock, raw materials etc. by their current market value instead

Primary Financial Statements
The balance sheet, income statement, and statement of cash flows, used by external groups to assess

Prime Book Of Entry
See Original book of entry .

Principal On A Note
The face amount of a note

Prior-Period Adjustments
Adjustments made directly to Retained Earnings in order to correct errors in the financial statement

Pro Rata
A term describing an allocation that is based on a proportionate distribution of the total.

Pro-Forma Invoice
An invoice sent that requires payment before any goods or services have been despatched.

Profit
The positive difference between total revenue from a business or investment, minus total expense. Se

Profit And Loss Account
An account made up of revenue and expense accounts which shows the current profit or loss of a busin

Profit Margin
The percentage difference between the costs of a product and the price you sell it for. Eg. if a pro

Profitability
A company's ability to generate revenues in excess of the costs incurred in producing those revenues

Proper Authorization
Policy regarding either a general class of transactions such as inventory or a specific transaction

Property Dividend
The distribution to shareholders of assets other than cash.

Property Plant And Equipment
Tangible, long-lived assets acquired for use in business operations

Proprietorship
A business owned by one person.

Prospectus
An official document that contains information required by the Securities & Exchange Commission to d

Provisions
One or more accounts set up to account for expected future payments (eg. where a business is expecti

Public Companies
Entities whose stock is publicly traded.

Purchase Discount
A reduction in the purchase price, allowed if payment is made within a specified period.

Purchase Invoice
See Invoice .

Purchase Ledger
A subsidiary ledger which holds the accounts of a business's suppliers. A single control account is

Purchase Method
A method used to prepare consolidated financial statements when one company has acquired a controlli

Purchase Returns And Allowances
A contra-purchase account used for recording the return of, or allowances for, previously purchased

Purchases Account
An account in which all inventory purchases are recorded

Purchases Journal
A special journal in which credit purchases are recorded.

Purchasing Power
A measurement of the relative value of money in terms of the quality and quantity of goods and servi

Rate Of Return
Also called the

Raw Materials
This refers to the materials bought by a manufacturing business in order to manufacture its products

Real Accounts
Accounts that are not closed to a zero balance at the end of each accounting period

Real Accounts
These are accounts which deal with money such as bank and cash accounts. They also include those dea

Realisation Principle
The principle whereby the value of an asset can only be determined when it is sold or otherwise disp

Realized Gains And Losses
Gains and losses resulting from the sale of securities in an arm's length transaction.

Rebate
If you pay for a service, then cancel it, you may receive a 'rebate'. That is, you may be refunded s

Receipt
A term typically used to describe confirmation of a payment - if you buy some petrol you will normal

Receivables
Claims for money, goods, or services.

Reconciling
The procedure of checking entries made in a business's books with those on a statement sent by a thi

Recourse
The right to seek payment on a discounted note from the payee if the maker defaults.

Recovery Period
The time period designated by Congress for depreciating business assets.

Redemption Value
The price, stated in the contract, to be paid by a company to repurchase preferred stock.

Refund
If you return some goods you have just bought (for whatever reason), the company you bought them fro

Registered Bonds
Bonds for which the names and addresses of the bondholders are kept on file by the issuing company.

Relative Fair Market Value Method
A way of allocating a lump-sum or 'basket' purchase price to the individual assets acquired based on

Rent
Periodic fee for the use of property.

Repossession
When the creditor takes back an item that has been purchased, because of nonpayment.

Reserve Accounts
Reserve accounts are usually set up to make a balance sheet clearer by reserving or apportioning som

Residual Income
The amount of net income an investment center is able to earn above a specified minimum rate of retu

Retail
A term usually applied to a shop which re-sells other people's goods. This type of business will req

Retail Inventory Method
A procedure for estimating the dollar amount of ending inventory

Retained Earnings
The portion of a corporation's owners' equity that has been earned from profitable operations and no

Retainer
A sum of money paid in order to ensure a person or company is available when required.

Retention Ratio
The proportion of the profits retained in a business after all the expenses (usually including tax a

Return On Investment (ROI)
A measure of operating performance and efficiency in utilizing assets computed in its simplest form

Return On Sales Revenue
A measure of operating performance

Return On Stockholders Equity
A measure of overall performance from a stockholder's viewpoint

Return On Total Assets
An overall measure of the return to both stockholders and creditors

Revenue
The sales and any other taxable income of a business (eg. interest earned from money on deposit).