Accounting Terminology Guide

L

L
Labor

Physical or mental effort; work.

Laissez-Faire

Doctrine that interference of government in business and economic affairs should be minimal.

Land

Property; real estate.

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.

Lay Off

Reduce the risk in standby commitment, under which the bankers agree to purchase and resell to the public any portion of a stock issue not subscribed to by shareowners who hold rights.

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.

Lease Acquisition Cost

Price paid by a real estate limited partnership, when acquiring a lease, including legal fees and related expenses.

Lease-Purchase Agreement

Agreement providing that portions of lease payments may be applied toward the purchase of the property under lease.

Leasehold

Property INTEREST a LESSEE owns in the leased property.

Ledger

Any book of accounts containing the summaries of debit and credit entries.

Ledger Account

A complete record of the transactions recorded in each individual account.

Lender

Individual or firm that extends money to a borrower with the expectation of being repaid, usually with INTEREST.

Lending Securities

SECURITIES borrowed from a broker's INVENTORY, other MARGIN accounts, or from other brokers, when a customer makes a short sale and the securities must be delivered to the buying customer's broker.

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.

Letter of Intent

Any letter expressing an intention to take an action, sometimes subject to other action being taken.

Leverage

The use of borrowed funds to increase the profit from an investment.

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