Which of the Following Is an Appropriate Journal Entry for the Initial

question 21

Multiple Choice

Which of the following is an appropriate journal entry for the initial recognition by a financier lessor of a finance lease arrangement?

• A) DR Leased asset: CR Cash
• B) DR Lease receivable: CR Asset
• C) DR Lease receivable: CR Lease liability
• D) DR Leased asset: CR Cash/accounts payable

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Definitions:

Financial Statements

Materials outlining a firm's financial health, incorporating its balance sheet, income statement, and cash flow statement.

Adjustment

Modifications made to account balances in order to correct financial statements or to allocate transactions correctly.

Accrual Accounting

An accounting method that recognizes revenue and expenses when they are incurred, not necessarily when cash is exchanged, enhancing the accuracy of financial statements.

Financial Statements

Formal records of the financial activities and position of a business, organization, or person, including balance sheets, income statements, and cash flow statements.