Lessees Prefer to Account for Their Leases as Operating Lease

question 72

Multiple Choice

Lessees prefer to account for their leases as operating lease because:

• A) it increases their debt to total equity ratio.
• B) it decreases the income tax expense.
• C) it increases the amount of total assets.
• D) it decreases the amount of liability reported.

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Definitions:

Rattlesnake

A venomous snake known for the distinctive rattle at the end of its tail, which it shakes as a warning signal to potential predators or threats.

Liability

Legal responsibility for one's actions or omissions, which may result in damages or legal penalties.

Aquarium

A tank or pool designed to hold aquatic plants and animals in controlled conditions for research, education, or display.

Wire Fence

A barrier made from wire, used to enclose or divide an area, typically for security or to keep livestock within a boundary.