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Online Accounting Dictionary

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  • Last-in, first-out (LIFO) inventory costing method assumes that the cost of latest inventories acquired are the first to be recognized as the cost of goods sold.
  • Ledger is a collection of all accounts a business maintains in its accounting system.  With the development of computerized accounting systems, ledgers are often in the form of electronic records (databases).
  • Liabilities are debts and obligations of a company.
  • Limited-life intangibles are intangible assets with a limited useful life (e.g. copyrights, patents). Limited-life intangibles are systemically amortized throughout the useful life of the intangible asset using either units of activity method or straight-line method.
  • Long-term operational assets are defined as recourses with economic lives of more than a year that a business possesses and uses in generating revenue.
  • Losses are similar to expenses in the way that both decrease assets or increase liabilities; however, losses differ from expenses in that they are caused by incidental transactions, rather than from ordinary operating activities.
  • Low value-added activity is an activity that consumes resources but adds little value to customers. The elimination of a low value-added activity does not change or slightly diminishes customer satisfaction. Examples of low value-added activities are: setting up machines, moving product parts, waiting, reworking, inspecting, storing, etc.
  • Lower of cost or market (LCM) rule states that if the market value of ending inventory is lower than the book value of such inventory, the resultant loss must be recognized in the current period.
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