A Long-Term Lease That Cannot Be Cancelled and That Transfers

question 49

Multiple Choice

A long-term lease that cannot be cancelled and that transfers virtually all the rewards and risks of ownership to the lessee is called:

• A) a direct lease.
• B) a finance lease.
• C) an operating lease.
• D) a leveraged lease.

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Definitions:

Profit-Maximizing

The process where a firm adjusts its production to achieve the highest possible profit given its constraints.

Labor (L)

A measure of the work done by human beings in the production process, considered a factor of production in economics.

Profit-Maximizing

The process businesses follow aiming to achieve the highest possible profits by adjusting production levels, pricing, and other operational factors.

Least-Cost Combination

An economic principle where firms seek to minimize their costs of production by using the most efficient combination of resources.