Which One of the Following Statements Is Correct Concerning an Operating

question 186

Multiple Choice

Which one of the following statements is correct concerning an operating lease?

• A) The leased asset will have a significant residual value at the end of the lease term.
• B) The lease will be recorded as a capital lease on the balance sheet of the lessee.
• C) The lessor can terminate the lease at any time without penalty.
• D) The lease term is generally equal to the economic life of the leased asset.
• E) The lessee is responsible for the maintenance and insurance related to the leased asset.

---

Definitions:

Hierarchy

A system or organization in which people or groups are ranked one above the other according to status or authority.

Diplomatically Useful

A term describing actions or policies that can serve a country's foreign policy interests or facilitate international relations.

Royal Blood

Royal blood refers to ancestry that belongs to a royal family, characterized by lineage that historically holds sovereign power or aristocracy.