Last-In, First-Out (LIFO) Method
An inventory cost method that assumes that the costs of the last items purchased should be assigned to the first items sold.

Lease
A contract that gives an individual or business the right to use a property for an agreed-upon price and time period.

Leasehold
The right of occupancy that tenants enjoy as part of a lease.

Letter of Credit (L/C or LOC)
A document from a bank giving authority for payments to be made to a third party from the bank on behalf of a bank’s customer.

Ledger
A book or file of all the company's accounts, arranged as in the chart of accounts.

Leverage
Property rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage relative to the underlying stock because a price change in the stock may result in a relatively large increase or decrease in the value of the option. In general, in finance, leverage is the use of debt financing. Leverage, within a corporation, is the use of borrowed money to increase the return on investment. For leverage to be positive, the rate of return on the investment must be higher than the cost of the money borrowed.

Leveraged Buyout
When one company takes over another and uses the acquired company’s assets in order to pay back the loans that were taken out in order to take over the company in the first place. See also rape and pillage.

Levy
The seizure of assets according to a writ of execution of real or personal property in a judgment debtor's possession to satisfy a judgment debt.

Liability
In accounting, is a loan, expense, or any other form of claim on the assets of an entity that must be paid or otherwise honored by that entity. All debts and obligations of a business.

Liability Insurance
Insurance protecting the policyholder against financial losses resulting from injury done to others.

Lien
A charge against real or personal property to secure the repayment of a debt.

Life Estate
An estate that gives income to a beneficiary until the time of the beneficiary’s death, at which time the estate passes to another party. The beneficiary cannot sell any property belonging to the estate.

LIFO (Last-In, First-Out)
Is an inventory cost flow whereby the last goods purchased are assumed to be the first goods sold so that the ending inventory consists of the first goods purchased.

Like Kind
In taxes, refers to property that is similar to another for which it has been exchanged: real estate exchanged for real estate, for instance. The definitions of like kind properties can be found in the US Tax Code at Section 1031.

Limited Liability Company
Similar to a corporation, a business form that shields investors from risk. Typically, limited liability companies are treated (typically) as partnerships for income tax purposes. Investors in a limited liability company are called members.

Limited Partnership
A partnership in which profits and responsibility for liabilities and debts are shared according to how much of the business each partner owns.

Line of Credit
A commitment on the part of a bank to lend up to a certain amount of money to a borrower.

Liquidity
Turning assets such as property into cash. An asset with “good liquidity” can be sold or converted into cash easily.

Living Trust
A trust giving one person’s property to another person. Also called an inter vivos trust.

Load
The commission that an investor pays to a broker when purchasing mutual funds. In a back-end load, the commission is paid when the investor sells the funds. In a front-end load, it is paid when the investor purchases the funds from the investment house.

Load Fund
A mutual fund whose purchase price includes a commission. No-load funds do not charge commissions.

Loan
Money lent at interest, to be repaid by a specific date.

Loan to Value Ratio
In real estate, is the percentage value for the relationship between the amount of the mortgage loan and the appraised value of the property. Loan-to-value ratio is expressed to a potential purchaser of a property in terms of the percentage a lending institution is willing to finance.

London Interbank Offered Rate (LIBOR)
The rate at which the biggest banks in London lend money to one another. LIBOR is used as an index by some banks for pegging the interest rate charged to borrowers.

Long-Lived Assets
Usually those assets that are not consumed during the normal course of business, e.g. land, buildings and equipment, etc.

Long-Term Liabilities
debts of a business that fall due more than one year ahead, beyond the normal operating cycle, or are to be paid out of non-current assets.

Loss Leader
A featured article of merchandise sold at a loss in order to draw customers.