A Direct-Finance Lease Is Classified in the Lessor's Balance Sheet

question 24

Multiple Choice

A direct-finance lease is classified in the lessor's balance sheet as ________.

• A) a liability
• B) an asset
• C) interest revenue
• D) a contra account to lease liability

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Definitions:

Direct Materials Cost

The cost of raw materials that are directly used in the production of a product.

Factory Overhead Cost

Indirect manufacturing expenses that are not directly tied to the production of goods, like utilities and salary of supervisors.

Direct Labor Cost

The total cost of all labor directly involved in the production of goods or services, excluding indirect labor costs.

Wages Paid

The total amount of money paid to employees for work performed, typically expressed as an hourly rate or salary.