The Following Are Sensible Reasons for Leasing

question 13

Multiple Choice

The following are sensible reasons for leasing:
I. short-term leases are convenient
II. standardization leads to low administrative and transaction costs
III. lease cancellation options are valuable
IV. tax shields can be used

• A) I and II only
• B) I, II and III only
• C) I, II, III and IV
• D) I, II, and IV only

---

Definitions:

Manufacturing Operations

Processes involved in the conversion of raw materials or components into finished goods that meet a company's quality standards and customer expectations.

Operating Segments

Components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Reportable

Pertains to the requirement to disclose or make known certain information to regulatory bodies or in financial statements.

Revenue Test

An accounting principle used to determine when revenue is recognizable in the financial statements based on specified criteria.