Last in, First out (LIFO) - ACCOUNTING method of
valuing inventory under which the costs of the last
goods acquired are the first costs charged to expense.
Commonly known as LIFO.
Lease - Conveyance of land, buildings, equipment
or other ASSETS from one person (LESSOR) to another
(LESSEE) for a specific period of time for monetary or
other consideration, usually in the form of rent.
Leasehold - Property INTEREST a LESSEE owns in
the leased property. Ledger - Any book of accounts
containing the summaries of debit and credit entries.
Lessee - Person or entity that has the right to
use property under the terms of a LEASE.
Lessor - Owner of property, the temporary use of
which is transferred to another (LESSEE) under the terms
of a LEASE.
Letter of Credit - Conditional bank commitment
issued on behalf of a customer to pay a third party in
accordance with certain terms and conditions. The two
primary types are commercial letters of credit and
standby letters of credit.
Leveraged Buy Out - Acquisition of a controlling
INTEREST in a company in a transaction financed by the
issuance of DEBT instruments by the acquired entity.
Leveraged Lease - Transaction under which the
LESSOR borrows funds to acquire property which is leased
to a third party. The property and lease rentals are
security for the LESSOR'S indebtedness.
Liability - DEBTS or obligations owed by one
entity (DEBTOR) to another entity (CREDITOR) payable in
money, goods, or services.
LIFO - See LAST IN, FIRST OUT.
Limited Liability Company (LLC) - Form of doing
business combining limited liability for all owners
(called members) with taxation as a PARTNERSHIP. An LLC
is formed by filing ARTICLES OF ORGANIZATION with an
appropriate state official. Rules governing LLCs vary
significantly from state to state.
Limited Liability Partnership (LLP) - GENERAL
PARTNERSHIP which, via registration with an appropriate
state authority, is able to enshroud all its partners in
limited liability. Rules governing LLPs vary
significantly from state to state.
Limited Partnership - PARTNERSHIP in which one or
more partners, but not all, have limited liability to
creditors of the partnership.
Liquid Assets - Cash, cash equivalents, and
marketable SECURITIES.
Liquidation - Winding up an activity by
distributing its ASSETS to the appropriate parties and
settling its DEBTS.
Litigation Support/Dispute Resolution - A service
that CPAs often provide to attorneys - e.g., expert
testimony about the value of a business or other asset,
forensic accounting (a partner stealing from his other
partners, or a spouse understating his income in a
matrimonial action). The lawyer hires the CPA to do the
investigation and determine the amount of money stolen
or understated.
LLC - See LIMITED LIABILITY COMPANY.
LLP - See LIMITED LIABILITY PARTNERSHIP.
Long-Term Debt - DEBT with a maturity of more
than one year from the current date.
Loss - Excess of EXPENDITURES over REVENUE for a
period or activity. Also, for tax purposes, an excess of
basis over the amount realized in a transaction. (See
NET INCOME.)
Lower of Cost or Market - Valuing ASSETS for
financial reporting purposes. Ordinarily, "cost" is the
purchase price of the asset and "market" refers to its
current replacement cost. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP) requires that certain assets (e.g.,
INVENTORIES) be carried at the lower of cost or market.
|