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:

Muscular Strength

The maximal force that a muscle or group of muscles can exert against resistance in a single effort.

Anaerobic Respiration

A form of respiration using electron acceptors other than oxygen. It often occurs in bacteria and in muscle cells where oxygen is scarce.

Aerobic Respiration

The process by which cells convert glucose and oxygen into energy, carbon dioxide, and water.

Chemical Pathway

A series of chemical reactions occurring within a cell that lead to the production of a certain substance or a change in the cell.