Which of the Following Is Incorrect with Regard to Short-Term

question 63

Multiple Choice

Which of the following is incorrect with regard to short-term leases?

• A)When a company signs a short-term lease it does not record a lease liability.
• B)A short-term lease is for 12 months or less,excluding expected renewals and extensions.
• C)When a company signs a short-term lease there is no entry at the time the lease is signed.
• D)A short-term lease does not contain a bargain purchase option.

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Definitions:

Net Income

The profit a company generates after all expenses, taxes, and costs have been deducted from total revenue.

Common Stock

Equity ownership in a corporation, with voting rights and potential dividends, but last in priority for assets and income.

Cash Dividends

Distributions of a corporation's earnings to shareholders as a return on their investment, typically in the form of cash.

Asset Balances

The values of all the assets that a company has listed on its balance sheet, these values are assessed at the end of a reporting period.