Which of the Following Statements Is Most CORRECT

question 22

Multiple Choice

Which of the following statements is most CORRECT?

• A) Firms that use "off balance sheet" financing, such as leasing, would show lower debt ratios if the effects of their leases were reflected in their financial statements.
• B) Capitalizing a lease means that the firm issues equity capital in proportion to its current capital structure, in an amount sufficient to support the lease payment obligation.
• C) The fixed charges associated with a lease can be as high as, but never greater than, the fixed payments associated with a loan.
• D) Capital, or financial, leases generally provide for maintenance by the lessor.
• E) A key difference between a capital lease and an operating lease is that with a capital lease, the lease payments provide the lessor with a return of the funds invested in the asset plus a return on the invested funds, whereas with an operating lease the lessor depends on the residual value to realize a full return of and on the investment.

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Definitions:

Immigration

The process of permanently relocating to a country that is not one's native homeland.

Productivity Growth

The rate at which a company or economy can produce more goods and services with the same amount of labor, capital, energy, and materials, often seen as a key driver of economic growth.

Savings Rate

The proportion of disposable income that is saved by households rather than spent on goods or services.

Mass Production

The manufacture of large quantities of standardized products, often utilizing assembly lines or automated technology.