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LABOR BUDGET
see DIRECT LABOR BUDGET.
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LABOR INTENSIVE
is used to describe
industries or sectors of the economy that relies relatively heavily on
inputs of labor, usually relative to capital but sometimes to human capital
or skilled labor, compared to other industries or sectors.
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LABOR THROUGHPUT VARIANCE
reveals
potential constraints on throughput caused by changes in the mix of products
being produced. It is computed the way the traditional labor "efficiency" variance
is computed but aggregated at a fairly high level (e.g., total plant
or total department) and expressed as percent of actual clocked production
hours vs. standard production hours.
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LAG TIME
is the period of time between
two closely related events, phenomena, etc., as between stimulus and response
or between cause and effect: a time-lag between the declaration of war
and full war production.
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LAND
, in terms of accounting, is the value of
real estate less the value of improvements, e.g. buildings.
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LANDED COST
is the total
expense of receiving goods at place of retail sale, including retail purchase
price, transportation costs, duties, value added taxes, excise tax and
other taxes.
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LANDING COST
is the initial
charges for landing imported goods, such as those for receiving goods
from dockside vessels or from barges to lighters. They may also cover
wharfage or delivery from the dock to land conveyance or warehouse.
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LARGE-CAP
is a stock with a level of capitalization
of at least $5 billion market value.
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LATIN AMERICAN MODEL
is an accounting
model. There are other accounting systems which differ from the U.S.
accounting model. U.S. GAAP and FASB standards are not the only accounting
principles used internationally; for example, many countries reverse
the U.S. debit and credit system. Many countries with high rates of inflation
account for inflation in financial reports much more than the U.S. does.
Also, for any company operating internationally there is the currency
exchange translation problem when consolidating financial statements.
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LBO
see LEVERAGED BUY-OUT.
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LCL
see LESS THAN CONTAINER LOAD.
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LCM
is Lower of Cost or Market.
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LCM RULE
is an abbreviation for lower-of-cost-or-market
rule. LCM requires that an asset be reported on the financial statements
at the lower of purchase cost or market value.
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LEAD SCHEDULE
, in accounting, is a
working paper with columnar headings similar to those in a working trial
balance, set up to combine similar ledger accounts the total of which
appears in the working trial balance as a single amount.
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LEAD-TIME
is the time between the initial
stage of a project or policy and the appearance of results, for example,
the long lead-time in oil production because of the need for new field
exploration and drilling.
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LEASE
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LEASE RATE FACTOR
is the periodic lease
or rental payment expressed as a percentage (or decimal equivalent) of
equipment cost. Used to calculate payments given the cost of equipment
(e.g. A lease rate factor of 0360 on an equipment cost of $5,000.00 requires
a monthly payment of $180.00 (0360x$5,000.00=$180.00).
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LEASEHOLD
is an agreement between
the lessee and lessor specifying the lessee's rights to use the leased
property for a specific purpose and given time at a specified rental
payment.
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LEASEHOLD IMPROVEMENTS
are those repairs and
/ or improvements, usually prior to occupancy, made to a leased facility
by the lessee. The cost is then added to fixed assets and amortized over
the life of the lease.
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LEAST-SQUARED METHOD
of approximating
cost is a statistical approach that is both objective and considers all
the data points. By using mathematical formulas to arrive at the best
possible cost line (i.e., the regression line), it is more accurate than
the methods mentioned previously. The regression line is in the form
Y=a + bX, where X is the independent variable and Y is the dependent
variable. The coefficient of determination (R2) can be used to judge
the line’s goodness of fit.
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LEDGER
is a book of accounts in which
data from transactions recorded in journals are posted and thereby classified
and summarized. The ledger is typically divided up into (traditionally
physical separate books): a. Purchases/Creditors Ledger is
the subsidiary ledger in which creditors' accounts are recorded; also
known as the bought ledger. Each creditor's account is credited with
purchases and debited with cash paid, discounts received and returns
outward. The detail in the creditors ledger is summarized in the creditors
ledger control account kept in the general ledger; b. Sales/Debtors
Ledger is the subsidiary ledger in which debtors' accounts are
recorded; also known as the sold ledger. Each debtor's account is debited
with sales and credited with cash received, discounts allowed and returns
inward. The detail in the debtors ledger is summarized in the debtors
ledger control account kept in the general ledger; c. General/Impersonal
Ledger is a book of final entry summarizing all of a company's
financial transactions, through offsetting debit and credit accounts,
e.g. liability, reserve, capital, income and expense accounts; and d. Private
Ledger is confidential and records items such as capital, loans,
mortgages, directors' salaries and awards, etc.
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LEDGER GROUP
is a group of ledgers consisting of one primary ledger and any number of secondary ledgers.
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LEGACY
, in law, is a gift of personal property by will.
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LEGALLY MANDATED
is that which is required by law,
e.g. the ratio of majority inhabitant vs. minority new-hire quotas in
a legislated work environment.
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LEGITIMACY THEORY
posits that businesses
are bound by the social contract in which the firms agree to perform various
socially desired actions in return for approval of its objectives and
other rewards, and this ultimately guarantees its continued existence.
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LEHMAN FORMULA
is a compensation formula
originally developed by investment bankers Lehman Brothers for investment
banking services:
• 5% of the first million dollars involved in the transaction for
services rendered
• 4% of the second million
• 3% of the third million
• 2% of the fourth million
• 1% of everything thereafter (above $4 million)
NOTE: Most investment bankers now require an additional multiplier to
offset inflation.
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LEMON
is a. an investment with a poor or negative rate
of return or a purchase made where the product has continuing problems,
e.g. a lemon of an automobile; or, b. an asset that is in continual need
of repair, e.g. an automobile can be referred to as a lemon.
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LEMONS AND PLUMS
, in finance, LEMON is an investment
with a poor or negative rate of return; and, PLUM is an investment with
a healthy rate of return.
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LESS THAN CONTAINER LOAD (LCL)
is a
shipment in which the freight does not completely fill the container;
or a particular consignor's freight when combined with others to produce
a full container load.
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LESSEE
is the party to
whom the possession of specified property has been conveyed for a period
of time in return for rental payments.
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