Given Its Importance,how Does the Accounting Profession Determine Whether a Lease

question 50

Multiple Choice

Given its importance,how does the accounting profession determine whether a lease is an operating lease or a purchase capital lease?

• A)by observing what ledger account the transaction was recorded in
• B)by determining the intentions of the lessee
• C)based on whether the item being leased is a capital asset or not
• D)based on whether title is likely to pass at the end of the lease period
• E)by asking whether the asset is to be used short-term or long-term

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Definitions:

Input

Resources used in the production process to generate output, including labor, capital, materials, and energy.

Production Function

The representation of the output that a firm can produce with varying combinations of inputs, emphasizing the efficiency and technology used.

Isoquant

A curve that represents all the combinations of inputs that produce the same level of output in production theory.

Output

The aggregate output of merchandise or services generated by a company, sector, or economic system.