Glossary
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J
Journal
— Once analysis is done on a
transaction, it will be recorded in a journal,
which is referred to as a book of original
entry.
Journalizing
—The act of recording in the
journal.
L
Leverage
—The amounts of risk and debt
the company has.
Liabilities
— Liabilities are what you owe,
your obligations.
Limited Liability Partnership (LLP)
—
Partners to have limited liability regarding
the misconduct or negligence of the other
partners.
Limited Partnership
— One general partner
who accepts unlimited liability and one or
more limited partners with liability limited to
the amount they invested.
Liquid Asset
— Cash is the most liquid asset
and is therefore listed first on the balance
sheet, followed by accounts receivable,
inventory, and so on.
Liquidity
— Liquidity is the ease with which
the asset can be converted to cash.The assets
of a business are listed in sequence according
to their liquidity.
Long-Term Assets
— Long-term assets
are used to operate a business and are not
expected to turn into cash or be used up
within the next 12 months unless they are
sold for reasons other than the day-to-day
operations of the business.
Long-Term Liabilities
— Long-term
liabilities are amounts due to be paid after 12
months.
Loss
— A decrease in the value of long-term
assets.
Lower of Cost and Net Realizable Value
(LCNRV)
—The method of estimating
inventory valuation being recorded at the
lower of its cost and its net realizable value.
M
Managerial Accounting
— Preparing
specialized reports to assist in decision
making inside the business.
Materiality
—The significance of
information to users. A piece of information
is considered material if it could influence or
change a user’s decision.
Measurement
—The process of
determining the amount at which an item is
recorded in the financial statements.
Merchandising Business
— Any company
that buys products to resell to customers.
Monetary Unit Assumption
— Accounting
records are expressed in terms of money.
Multistep Income Statement
— An
income statement that further breaks down
specific revenues and expenses to show
subtotals like gross profit, operating expenses,
and operating income.
Mutual Agency
— Each partner is able to
speak for the other partners and bind them
to business contracts. In other words, each
partner is bound by the business actions of
the other partners.
