Which of the Following Statements Is FALSE

question 19

Multiple Choice

Which of the following statements is FALSE?

• A)Most financial analysts and sophisticated investors consider operating leases (which must be listed in the footnotes of the financial statements)to be additional sources of leverage.
• B)By carefully avoiding the four criteria that define an operating lease for accounting purposes,a firm can avoid listing the long-term lease as a liability.
• C)Because a lease is equivalent to a loan,the firm can increase its actual leverage without increasing the debt-to-equity ratio on its balance sheet.
• D)For most large corporations,the amount of leverage the firm can obtain through a lease is unlikely to exceed the amount of leverage the firm can obtain through a loan.

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Definitions:

Totem Pole

A carved wooden pole, typically created by the Indigenous peoples of the Pacific Northwest Coast of North America, that represents and commemorates ancestry, histories, people, or events.

Ancestry

The lineage or heritage of an individual, referring to the family descent and the cultural and ethnic background from which one comes.

Crest Poles

Tall, carved wooden poles produced by Indigenous peoples of the Pacific Northwest to represent family lineage, histories, rights, and privileges.

Oka Crisis

A 1990 land dispute between a group of Mohawk people and the town of Oka, Quebec, Canada, which highlighted Indigenous land claims and rights.