Which of the Following Statements Is FALSE

question 2

Multiple Choice

Which of the following statements is FALSE?

• A)The lease-equivalent loan is the loan that is required on the purchase of the asset that leaves the purchaser with the same obligations as the lessor would have.
• B)Lease obligations themselves could trigger financial distress.
• C)When a firm enters into a lease,it is committing to lease payments that are a fixed future obligation of the firm.
• D)When a firm leases an asset,it is effectively adding leverage to its capital structure (whether or not the lease appears on the balance sheet for accounting purposes).

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Definitions:

Due Date

The due date is the specified date by which a task, obligation, or payment is required to be completed or submitted.

Maker

The individual or entity that creates or issues a financial instrument, such as a check or a promissory note.

Note Receivable

A written promise that one party will pay another party a specified sum of money, either on demand or at a set future date.

Promissory Note

A financial instrument in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms.