Finance Leases Are Long-Term or Noncancelable Leases in Which the Lessor

question 114

True/False

Finance leases are long-term or noncancelable leases in which the lessor transfers substantially all the risks and rewards of ownership to the lessee.

---

Definitions:

Variable Costing

Accounting method that considers only variable costs (costs that change with production volume) in the calculation of product cost, excluding fixed costs.

Variable Costing

An accounting approach where only variable production costs (direct materials, direct labor, and variable manufacturing overhead) are included in product costs, with fixed overhead treated as a period expense.

Unit Product Cost

The total cost associated with producing a single unit of product, including direct materials, direct labor, and allocated overhead.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed manufacturing overhead) in the cost of a product.