Resources  ❯  Accounting Terms

Ordinary Annuity

[OR-duh-nair-ee uh-NOO-uh-tee]

What is the definition of Ordinary Annuity?
An ordinary annuity is a financial product consisting of a series of equal payments made at regular intervals at the end of each period, with interest compounding on these payments.
Using Ordinary Annuity in an Example

For example, if you invest in an ordinary annuity, you might make annual payments of $1,000 at the end of each year for 20 years into the annuity. The annuity earns a certain percentage of interest, compounded annually, and you receive the sum of the payments plus interest at the end of the annuity term.

Using Ordinary Annuity in a sentence

During the financial planning meeting, the advisor explained how an ordinary annuity could be a reliable source of income during retirement, as it provides consistent payments at the end of each period.

Related Terms

OCBOA

A consistent accounting basis other than Generally Accepted Accounting Principles (GAAP) used for financial reporting, such as the income tax basis or a cash basis.
Learn More

OPEB

All post-retirement benefits other than pensions, such as health insurance, life insurance, and other non-pension benefits, provided by employers to their retired employees.
Learn More

Objectivity

In accounting, objectivity refers to the unbiased and impartial presentation of financial data, ensuring that such data is free from personal feelings or influences and accurately represents the financial reality.
Learn More

Obligations

Any amount or duty which may require payment, action, or performance by an entity at a future time.
Learn More

Obsolescence

The process or condition of becoming outdated or no longer used, typically because something newer or more efficient has emerged.
Learn More

Offer

In finance, an offer is the price at which a seller is willing to sell a security or other asset, indicating a willingness to transact at that price.
Learn More

Offering Price

Price per share at which a new or secondary distribution of securities is offered for sale to the public.
Learn More

Open-End Mutual Fund

A mutual fund that does not have a fixed number of shares outstanding, continuously offers new shares to investors, and buys back shares at their current net asset value.
Learn More

Operating Agreement

A written document that outlines the governance and operational guidelines of a Limited Liability Company (LLC), serving a similar purpose to corporate bylaws or a partnership agreement.
Learn More

Operating Cycle

The period of time between the acquisition of goods and services involved in the manufacturing process and the final cash realization resulting from sales and subsequent collections.
Learn More

Operating Expense

An expense other than cost of goods sold that is incurred in running a business, including costs related to administration, sales, and other operational activities.
Learn More

Operating Lease

An operating lease is a type of lease agreement for equipment or property, typically structured with a term shorter than the asset's useful life. The lessor remains responsible for maintenance and servicing. This lease does not result in asset ownership transfer to the lessee.
Learn More

Operating Profit (or Loss)

Operating profit or loss is the difference between a company's revenues and its related costs and expenses, derived exclusively from its regular business activities, before deductions for interest and taxes.
Learn More

Opportunity Cose

The highest value or rate of return that could have been earned by an alternative course of action when a particular choice is made.
Learn More

Option

An option is a financial derivative that gives the buyer the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price (strike price) within a specified time period.
Learn More

Ordinary Income

Income that is earned through standard operations, such as wages, salaries, bonuses, and interest. It is categorized separately from capital gains and is typically taxed at a higher rate under the Internal Revenue Code.
Learn More

Organization

The act of arranging elements or details in a systematic, structured, or coherent manner, often to achieve specific goals or functions.
Learn More

Organization Expenditures

The costs incurred during the formation of a trade or business or for-profit activity before it begins active operations. These expenses may include legal fees, state fees, and other costs associated with establishing the entity. Taxpayers may elect to amortize these expenses over a period of no less than 60 months. If not amortized, these costs are not deductible until the business is sold or ceases operations.
Learn More

Original Cost

In accounting, the original cost refers to all costs associated with the acquisition of an asset, including the purchase price and any other expenses necessary to bring the asset into usable condition.
Learn More

Other Comprehensive Basis of Accounting (OCBOA)

A consistent accounting framework other than Generally Accepted Accounting Principles (GAAP) used for financial reporting. Examples include cash basis and income tax basis of accounting.
Learn More

Other Post-Retirement Employee Benefit (OPEB)

Benefits, other than pensions, provided by employers to their retired employees. These benefits can include health insurance, life insurance, and other forms of non-pension benefits.
Learn More

Output

An amount of something produced, especially during a given period of time.
Learn More

Outsourcing

The practice of contracting out certain business functions or processes to external entities or suppliers, typically to reduce costs, access specialized expertise, or improve efficiency.
Learn More

Outstanding

In accounting and finance, outstanding refers to the total amount of stock currently held by all shareholders, excluding shares held by the company as treasury stock, or to amounts that have not yet been settled or paid.
Learn More

Outstanding Check

A check that has been written and recorded in the issuer's financial records but has not yet been processed or cleared by the bank, and therefore has not been deducted from the bank balance.
Learn More

Over-the-Counter

Refers to the trading of securities, such as stocks and bonds, directly between two parties without the oversight of an exchange. Over-the-counter trading is typically done for securities not listed on a formal exchange, allowing for less regulated and more flexible transactions.
Learn More

Overhead

Costs of a business that are not directly associated with the production or sale of goods or services, including expenses such as rent, utilities, and administrative salaries.
Learn More

Overhead Application Rate

A standard rate used to allocate overhead costs to specific activities, typically measured in labor or machine hours.
Learn More

Owner’s Equity

The residual interest in the assets of a business entity that remains after deducting the entity’s liabilities; it represents the owner's claim on the assets of the business.
Learn More

1031 Question? Ask ARTE

Deferred's AI 1031 Research Assistant is trained on 8,000+ pages of US tax law and outperforms human CPAs by 22%+

CHAT NOW
Deferred.com Resources

Recent Posts

Can you 1031 exchange a vacation home?
Because the 1031 Exchange rules permit owners to use the property part of the year, exchangers can have a cash-flowing, appreciating investment that also serves as their semi-permanent vacation property.
Aaron LaRue
1031 Improvement Exchange
Learn how a 1031 Improvement Exchange can enable a value-add real estate investment strategy while also deferring capital gains taxes.
Aaron LaRue
1031 Exchange Examples
Review some common 1031 exchange examples and take advantage of our profit-generating ideas to use the 1031 Exchange to make your property portfolio more profitable.
Aaron LaRue
What are the disadvantages of a 1031 exchange?
The 1031 Exchange is a great way for businesses and investors to take advantage of the additional value of their real estate and put it into their next purchase, but are there tradeoffs to consider?
Aaron LaRue
What Happens to Depreciation in a 1031 Exchange?
Depreciation recapture is a process then enables the IRS to collect taxes on the financial gain you have made from the sale of an asset. Exactly what depreciation recapture rate will apply will depend on your individual circumstances.
Aaron LaRue
Form 6252: Report an Installment Sale
Use this form to report income from an installment sale on the installment method.
Aaron LaRue
Contact US
866-442-1031
(Call or Text)
support@deferred.com
Ask ARTE
About DeferredReviewsPricingCareers
Partner with Us$5m Fidelity BondEngineering Blog
ResourcesARTE: AI Tax AssistantDeferred Gains Calculator1031 Exchange Articles
Accounting Terms1031 Rules per StateFind a 1031 Intermediary
© 2024 Deferred Inc.
Terms PrivacyCommunications