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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.
Lifetime Learning Credit - This allows a credit for 20 percent of qualified tuition and fees paid by the taxpayer with respect to one or more students for any year that the HOPE SHCOLARSHIP CREDIT is not claimed.
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.
Listed Property - Limits are imposed on the DEPRECIATION deduction a taxpayer may claim on certain listed property as follows:
1. A passenger car;
2. Other property used as transportation;
3. Property used for purposes of entertainment, recreation, or amusement;
4. A computer and peripheral equipment; and
5. Cellular telephone.
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.
