Which of the Following Is the Best Definition of a Financial

question 158

Multiple Choice

Which of the following is the best definition of a financial lease?

• A) A longer-term, fully amortized lease under which the lessee is responsible for upkeep. Usually not cancellable with-out penalty.
• B) The user of an asset in a leasing agreement. Lessee makes payments to lessor.
• C) The owner of an asset in a leasing agreement. Lessor receives payments from the lessee.
• D) A leveraged lease is a tax-oriented lease involving three parties: a lessee, a lessor, and a lender.
• E) The NPV of the decision to lease an asset instead of buying it.

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Definitions:

Cash Outflows

Money that is spent or invested, flowing out of a business or individual's account.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Accounts Payable

The amounts a company owes to its suppliers or creditors for goods or services received that are not yet paid for.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business.