Which of the Following Statements Regarding Leases Is CORRECT

question 157

Multiple Choice

Which of the following statements regarding leases is CORRECT?

• A)Capital leases are favored over operating leases because capital leases lower the debt ratio.
• B)A debit balance in the Leased Asset account on the balance sheet indicates an operating lease.
• C)Title is transferred to the lessee at the end of an operating lease term.
• D)If a lease does not meet one of the four exact criteria provided by U.S. GAAP guidelines, it is classified as an operating lease by default.

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Definitions:

Prenegotiate

The process of discussing and agreeing on basic terms before entering into formal negotiations.

Negotiation Process

The systematic approach or series of steps taken by parties to come to an agreement or resolve a dispute.

Bargainers

Individuals or parties engaged in negotiations seeking to reach a mutual agreement.

Assumptions

Beliefs or premises taken for granted without requiring conclusive evidence.