Legal Capital Definition

What is meant by Legal (Stated) Capital? The minimum amount that can be reported as contributed capital is called legal or stated capital. Usually, equal to the par or stated value of all capital stock.

Lease Definition

What is meant by the term “lease”? A lease is a contractual agreement between the lessor (the owner of the property) and the lessee (the user of the property) that gives the lessee the right to use the lessor’s property for a specific period of time in exchange for stipulated cash payments.

Lower of Cost or Market (LCM) Theory

What is meant by Lower of cost or market? Lower of cost or market is a method of inventory pricing by which the inventory is priced at cost or market, whichever is lower. It is an application of conservatism in accounting. Explanation Under generally accepted accounting principles (GAAP), the presumption is that inventories will be …

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LIFO Liquidation Definition

What is meant by LIFO Liquidation? LIFO Liquidation is a financial event that occurs when a firm sells more units in any year than it purchases, and LIFO layers that have been built up in the past are liquidated.

Long-term Investments Definition

What is meant by the accounting term “Long-term Investments”? Long-term InvestmentsĀ are those assets that include holdings in securities (stocks and bonds) not classified as current, and in some circumstances, investments in certain subsidiaries that have not been consolidated with parent firm.

Losses Definition

What is meant by accounting term “Losses”? Losses may be defined as the decreases in equity (net assets) affecting the firm during a set period from all activities (except for expenses and distribution to owners).

Limited Liability Definition

What is Limited Liability? Limited liability is a term meaning that the owners of the corporation are not, as individuals, legally responsible for the debts incurred by the corporation, in excess of the amount that they have invested in the corporation.

Liabilities Definition

What are the liabilities? Those obligations or debts which are payable by business to its owner and others are called liabilities. Or Liabilities are the obligations of the enterprise. The amount owed to creditors, employees, the government, or others. Example Creditors, Loan, Capital, etc.