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Labour
intensive
- production methods which rely on a large workforce relative to the
amount of machinery.
Labour
rate (price) variance -
Any difference from standard in the average hourly rate paid to workers:
Labour Rate Variance = (Actual Rate - Standard Rate) x Actual
Hours of Labour Used
Labour turnover - The number of people that leave a business over a period of time as a
percentage of the number of people employed.
Laffer curve
- A graphical representation of the relationship between tax
rates and total tax revenues raised by taxation.
Lagging indicators - Series of indicators that follow or trail behind aggregate economic
activity.
Lag
time -
The length of time in between two events or phenomena which
are closely related. An example of lag time would be
the period between the Central Bank increasing interest
rates and the economic activity in the economy falling.
Laissez-faire
- Literally, "let do"; a policy advocating the minimisation
of government intervention in a market economy.
Adam Smith's Wealth of
Nations represents this doctrine.
Laissez-faire leadership - A leadership style where employees are encouraged to make
their own decisions, within limits.
Land
(Accounting) -
is the value or worth of any real estate assets less the
money spent of any improvements,
e.g. buildings.
Land (Economics)
- The natural resources that are available without
alteration or effort on the part of labour. Land as a
resource includes only original fertility and mineral
deposits, topography, climate, water, and natural
vegetation.
Landed
costs -
The total costs involved when importing goods. They include
buying, shipping, insuring and associated taxes.
Landfill
- A way of disposing of waste which involves burying it in
the ground.
Last in first out (LIFO)
- A method of stock valuation which involves issuing more
recent deliveries first, so that closing stock is valued at
the older and possibly lower purchase price.
Lateral integration
– The merging of firms involved in production of similar
goods but not in competition with each other.
Latest
finish time
- in program evaluation and review technique (PERT),
latest time at which an activity must be completed without
holding up the complete project.
Latest
start time
- in
program evaluation and review technique
(PERT), latest
time at which an activity must begin without holding up the
complete project.
Latest time
(LT)
- in
program evaluation and review technique(PERT), latest
time at which an activity can be completed without extending
the completion time of the project.
Law of comparative advantage - Trade can benefit all countries if they specialise in the goods
in which they have a comparative advantage.
Law of demand
-
The
assertion that market price and quantity demanded in the
market vary inversely with one an other, that is, that
demand curves are negatively sloped. Assuming all
other
things being equal (ceteris paribus) .
Law of diminishing (marginal) returns - The
hypothesis that if increasing quantities of a variable
factor are applied to a given quantity of fixed factors, the
marginal product and average product of the variable factor
will eventually decrease.
LCM
Rule (lower-of-cost-or-market rule) - LCM rule requires an asset be reported in the financial
statements of a firm at either the lower of purchase cost or
its current market value market value (the lowest of the two
should be used).
Leadership
styles
– Approaches to dealing with people when in a position of
authority. See also autocratic, laissez-faire and
democratic.
Leading
indicators
- Series of indicators that tend to predict future changes
in economic activity.
Lead time
- The time in between placing the order and the delivery of goods.
Leakages
- Those parts of national income not used for consumption
i.e. net taxes, saving, and imports.
Lean production
- An approach to operations management aimed at reducing the
quantity of resources used up in production.
Learning
curve
–
A curve
showing how a firm's costs of producing at a given rate of
output fall as the total amount produced increases over time
as a result of accumulated learning of how to make the
product efficiently using given equipment.
Learning organisation
- A business which facilitates the learning of its members
and benefits competitively as a result.
Lease
- Legal
agreement whereby the lessee uses real or personal property
of the lessor for a rental charge.
Leasehold -
An the agreement made between the lessee and the lessor
which specifies the
lessee's different rights and obligations to make use of the leased
asset or property for the specific
purpose and/or the given time period at a specified amount
rent.
Ledger -
A book in which entries posted from the journals are
re-organised into accounts. In
effect, the ledger is a classification and summarization of
financial transactions and the basis for the preparation of
the balance sheet and income statement.
Legal
entity –
An individual or organisation that has the legal recognition
or standing to
enter/sign a contract and can be legally sued for failure to
carry out or perform
the obligations entered into as agreed under the contract.
Legal
liability -
1. obligation with specified terms and conditions by which a
defined payment amount in money, goods, or services is to be
paid within a defined time period in return for a current
benefit. Or 2. responsibility of the accountant to the
client and third parties relying on the accountant's work.
Accountants can be sued for fraud and negligence in
performance of duties.
Legal monopoly
- In the United Kingdom, any business with over 25 per cent
of the market.
Legal
tender
- Anything that by law must be accepted for the purchase of
goods and services or in discharge of a debt.
Lender of last resort - The role of the Bank of England as the guarantor of sufficient
liquidity in the monetary system.
Less-developed countries (LDCs)
- The lower-income countries of the world, most of which
are in Asia, Africa, and South and Central America. Also
called under developed countries, developing countries.
Lessee -
The party or entity to who the possession/occupation of
specific property has
been legally conveyed for a given period of time in the
return for rent
payments.
Lessor -
The party or entity who conveys/leases a specified piece of property
or other asset to another party or entity for a
specified period of time in return for receipt of rental
payments.
Letter
of credit (LOC)
- A legal letter or document that is issued by the buyer’s
bank which upon
the presentation of any specific required documents the
payment should be forth coming.
It is the Usual practice for the seller's bank to confirmby
the seller's the protection to be given to a seller that the
agreed payment will be made on time if the items specified
in the agreement are
shipped as agreed, and also protection is given to a buyer that
the specified items will be supplied or shipped prior to the
payment being made.
Leverage –
Is a
term commonly used in finance and accounting to describe the
ability of fixed costs to magnify returns to a firm's
owners. Operating leverage, a measure of operating risk,
refers to the fixed operating costs found in the firm's
income statement. Financial leverage, a measure of financial
risk, refers to financing a portion of the firm's assets,
bearing fixed financing charges in hopes of increasing the
return to its owners. Total leverage is a measure of total
risk. The way to measure total leverage is to determine how
earnings per share (EPS) is affected by a
change in sales.
Leveraged buyout (LBO)
– The acquisition of one company by another, typically with
borrowed funds. Usually, the acquired company's assets are
used as collateral for the loans of the acquiring company.
The loans are paid back from the acquired company's cash
flow. Another possible form of leveraged buyout occurs when
investors borrow from banks, using their own assets as
collateral to acquire the other company.
Leverage ratios -
Measure the relative different contributions of the
stockholders as compared to the
creditors, and also the entity's ability to pay its financing
charges. It is the value of entity's total debt compared to
the total value of the entity.
Levy
- To impose and collect a charge.
Liability
– The
amount payable in dollars (e.g., accounts payable) or future
services to be rendered (e.g., warranties payable).
Liabilities
-
Items owed
by the business. .Long term liabilities are long-term
borrowings which do not have to be repaid within one year.
Current liabilities are amounts owed by the business which
must be repaid within one year.
Liberalism
- The political philosophy according to which the government
should choose policies deemed to
be just,
as evaluated by an impartial observer behind a "veil of
ignorance".
Libertarianism
- The political philosophy according to which the
government should punish crimes and enforce voluntary
agreements but not redistribute income
License -
A legal document giving official permission to do
something. Import licenses are often a from of protection.
Lien
- The
right of a party, typically a creditor, to hold, keep
possession of, or control the property of another to satisfy
a debt, duty, or liability.
Life-cycle theory
- A hypothesis that relates the household's actual
consumption to its expected lifetime income rather than (as
in early Keynesian theory) to its current income.
Life expectancy at birth
- The average number of years new-born babies can be
expected to live if health conditions remain the same. It is
a good indicator of health and medical care.
LIFO
(last-in, first-out) - A
method of valuing inventory using an a cost flow approach
where
the last goods purchased by the firm are then assumed to be the first goods
that will be sold by the firm so that the value ending inventory
will consist of the value of the first items purchased.
LILO (last In
last out) - A method of valuing stock using
an inventory cost flow whereby the last goods purchased are
assumed to be the last goods sold so that the ending
inventory consists of the last goods purchased.
Limitation
-
Under contract law refers to a certain limited period of
time specified by law after which time any legal actions, suits, or
other prosecutions will not be considered by the courts.
Limited liability
–
The
limitation of the financial responsibility of an owner
(shareholder) of a corporation to the amount of money that
the shareholder has actually invested in the firm by
purchasing its shares.
Limited partner -
A partner in a firm who has no recognised management level authority and
therefore whose liability has been restricted by the
partnership agreement to the amount of their investment.
Limited partnership
- A form of business organisation in which the firm has two
classes of owners: general partners, who take part in
managing the firm and are personally liable for all of the
firm's actions and debts, and limited partners, who take no
part in the management of the firm and risk only the money
that they have invested.
Line
authority
- The power to give orders to subordinates. It contrasts
with staff authority, which is the authority to advise but
not command others. Line managers are responsible for
attaining the organization's goals as efficiently as
possible. Production and sales managers typically exercise
line authority.
Line graph
- A line which shows the relationship between two variables.
Line management -
The administration and management of the firms line functions.
The
administration of any activities which contribute directly to the
firm's production.
Line
managers
- Managers with direct authority over subordinates in their
departments; they are able to take decisions in their
departmental area.
Line of best fit – A line plotted through a series of points which balances those on one
side with those on the other, and best represents the slope
of the points.
Line of credit -
Bank's commitment to make loans to a company for a
specified maximum amount for a given period of time,
typically one year. There is usually no commitment
fee charged on the unused line. However, a compensating
balance requirement often exists.
Liquid -
To maintain sufficient or enough assets in the form of cash
(or cash like) or any other assets
that can easily be converted to cash in order to satisfy an
entity's current liabilities.
Liquid asset –
Refers to
cash (or cash like) and any other asset that can easily sand quickly be converted/changed into cash
(e.g., cash, and other easily-convertible assets).
Liquidation -
Is used to refer to the process of selling of the
total assets
of a person or entity who is a debtor and then the use of
any proceeds raised by the sale of to
pay off outstanding creditors. Or 2) Declared by a court when a company
is unable to meet its debts.
Liquidation
value -
Liquidation
value is often very different from the book value because it
uses the value
of the entity's assets at the time of liquidation, which is often
much lower than
either the market or book value of those assets. The
entity's liabilities will then be deducted from the stated
liquidation amount or value of the total assets in order to determine the
correct liquidation
value of the entity
Liquidity
- The ease with which an asset can be converted into cash
without loss.
Liquidity preference (LP) function - The function
that relates the demand for money to the rate of interest.
Also called demand for money function.
Liquidity problems
- Difficulties that arise because of the lack of assets that
can easily be converted into cash to make immediate
payments.
Liquidity preference - The demand for holding assets in the form of money.
Liquidity ratio (Economics) -The proportion of a bank's total assets held in liquid form.
Liquidity ratio (Accounting) -
Cash ratio.
Listed
company -
A public company which is listed or quoted on a specific or
may different stock exchange/s.
Listed
investments
- Refers to the investments which have been listed and/or quoted on
the stock
exchange.
Living
standards
– The amount of goods and services available per person.
Living standards are limited by a country's ability to
produce. Potential national output depends on the country's
resources". technology and productivity,
Loan -
An agreement in which the owner of specific assets (the lender)
agrees to allow another entity/individual (the borrower) to
have use of the specific assets for a stipulated
period of time. In return, the borrower has agreed that they
will pay
the lender interest and also will return the specified
assets or cash at the completion of the time period agreed.
Lock-outs -
Union members are temporarily laid off until they are
prepared to agree to the firm's conditions.
Logarithmic scale
- A scale in which equal proportional changes are shown as
equal distances (for example, 1 inch may always represent
doubling of a variable, whether from 3 to 6 or 50 to 100).
Also called log scale or ratio scale.
Logging -
The practice of recording data, in some medium, sequential
input, often in a time-associated format.
Logrolling
- The political practice in which a voter agrees to support
another's programs in exchange for support for his or her
own.
Long run
- That time-period in which all factors of production can be
varied.
Long-run aggregate supply
- The relationship between the aggregate quantity of final
goods and services (real GNP) supplied and the price level
(the GNP deflator) when there is full employment - that is
when unemployment is at its natural rate.
Long-run aggregate supply (LRAS) curve
- A curve showing the relationship between the price level
of final output and the total quantity of output supplied
when all markets have fully adjusted to the existing price
level; a vertical line at Y = Y.
Long-run average cost (LRAC) curve
- The curve relating the least-cost method of producing any
output to the level of output when all inputs can be varied.
Long-run Phillips curve
- Shows the relationship between inflation and unemployment
when the actual inflation rate equals the expected inflation
rate.
Long-run profit maximisation - An alternative theory of the firm which assumes that managers
aim to shift cost and revenue curves so as to maximise
profits over some longer time period.
Long-run shut-down point
- This is where the AR curve is tangential to the
LRAC curve. The firm can just make normal profits. Any
fall in revenue below this level will cause a
profit-maximising firm to shut down once all costs have
become variable.
Long-run supply curve
- The supply curve that describes the response of the
quantity supplied to a change in price after all
technologically possible adjustments have been made.
Long term -
1. long period or length of time. In securities a bond of
ten years or more is considered long term. Or 2. it may
refer to strategic goals and plan whereas short term refers
to operational goals and plans. Or 3. in accounting thought
a period of in excess
of 12 months is considered long term, e.g. long-term liabilities.
or 4. in economics long term is where al factors are
considered variable.
Long term debt -
Monies owed for a period exceeding one year.
Long
term debt to equity - Shows the relationship between the long-term capital
that has been contributed from the creditors as compared to
that contributed by the owners.
Long term liabilities -
Are liabilities that do not fall due in the current
accounting period. Normally liabilities that have to
be paid back in more than one year.
Lorenz curve
- 1.
a
graph showing the extent of departure from equality of
income distribution. Or 2)
a type of cumulative frequency
curve which shows the disparity between equal distribution
and actual distribution.
Loss -
Finance,
is when the expenses of an entity exceed sales or revenues
of the entity, i.e. items are sold for less than they cost
the firm.
Loss leaders
- Products with prices set deliberately below average total
cost to attract customers who will then buy other; more
profitable, products.
Lot
- 1. a group of specific items which may purchased or sold
at the same time. Or
2. when multiple different shares are held or possibly traded together. or 3. A
specific parcel/piece of land.
Low-income Developing Countries
- Countries with a low standard of living such that many
people cannot meet even their basic needs. These include
some of the most populous countries in the world covering
approximately 3 billion people.
Lump sum -
An agreed upon amount of money, which is to be all paid at one time in
complete and final settlement of a claim or outstanding bill.
Lump-sum
tax - A
tax that is the same amount for every person.
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