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Ledgers: the principal book in which the transactions of a business are recorded. The details of customers and their transactions are recorded in the sales ledger. Suppliers and their transactions are recorded in the purchase ledger. All ledgers are amalgamated in the nominal ledger by posting balances from the individual ledgers. The nominal ledger also receives postings from the cash book and directly from journal entries for all other accounting transactions.

Liabilities: money you owe to others. This can be current (payable within one year) or long-term. Long term liabilities, along with Share Capital and Reserves make up one side of the balance sheet equation showing where the money came from. The other side of the balance sheet will show Current Liabilities along with various Assets, showing where the money is now.

LIBID (London Interbank Bid Rate): the London Interbank Bid Rate (LIBID) is a bid rate; the rate bid by banks on Eurocurrency deposits (i.e. the rate at which a bank is willing to borrow from other banks). It is "the opposite" of the LIBOR (an offered, hence "ask" rate). Whilst the British Bankers'. Association BBA LIBOR rates, there is no correspondent official LIBID fixing.

LIBOR (London Interbank Offered Rate): the London Interbank Offered Rate (or LIBOR, pronounced LIE-bore) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). LIBOR will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.

LIFO (Last In First Out): a method by which the goods sold are said to have come from the last lot of goods received.

Limited Company: a limited company is where the owners of the business are the shareholders but the business may be managed by a completely different set of people, the directors. In legal terms, a limited company is a completely separate entity from the owners, the shareholders. Many companies are run as private limited companies (Ltd), and often, the shareholders and the directors, are the same people. The largest companies however, are public limited companies (PLC). In these companies, the shareholders and the directors are completely different. The directors run the company on behalf of the shareholders, the owners, and are accountable to the shareholders for their management of the business and stewardship of the assets. The shareholders provide capital for the business by buying shares in the company and they share in the profits of the company by being paid dividends. The accounting records that are required for a limited company are regulated by law See Sole Trader and Partnership for a comparison of different business types.

Limited Liability: the main difference between the trading of a sole trader or partnership and a limited company is the concept of limited liability. If the business of a sole trader or a partnership is declared bankrupt then the owner or owners are personally liable for any outstanding debts of the business. However, the shareholders of a company have limited liability. This means that once they have fully paid for their shares they cannot be called upon for any more money if the company is declared bankrupt. All they will lose is the amount they paid for their shares.

Limited Liability Partnerships (LLP): with this form of partnership, there is limited personal liability for individual partners (similar in manner to a limited company). For tax purposes, an LLP does not differ greatly from an ordinary partnership.

Limited Partner: a partner whose liability is limited to the capital he or she has put into the firm.

Limiting Factor: anything that limits activity. Typically, this would be the shortage of supply of something required in production, for example, machine hours, labour hours, raw materials, etc. However, it could also be something that prevents production occurring, for example a lack of storage for finished goods, or a lack of a market for the products.

Liquidation: when a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are distributed to shareholders. This process is liquidation.

Liquidity: this is the measure of how much cash you have and is it enough for your needs. It can include things that can be turned into cash quite quickly like debtors and other current assets. A ‘liquidity problem’ is where you don’t have enough cash to pay your immediate bills.

Liquidty Ratios: those ratios that relate to the cash position in an organisation and hence its ability to pay liabilities when due.

Loan: an arrangement in which a lender loans money or property (known as the principal or principle amount) to a borrower and the borrower agrees to return the principal amount or repay the money, usually along with interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan.

Long-Term Asset: long-term assets are those assets usually in service over one year such as buildings, equipment, etc. These often receive favourable tax treatment over short-term assets.

Long-Term Liabilities: liabilities that do not have to be paid within twelve months of the Balance Sheet date.

Loss: the result of selling goods for less than they cost to purchase.