All of the Following Statements Are True with Regard to How

question 72

Multiple Choice

All of the following statements are true with regard to how the statement of financial position will be similarly affected by leasing the assets as opposed to issuing bonds and purchasing the assets, except which statement?

• A)since a long-term non-cancelable lease which is used as a financing device generally results in the capitalization of the leased assets and recognition of the lease commitment in the statement of financial position, the comparative effect is not very different from purchase and ownership.
• B)Assets leased under finance leases would be capitalized at the present value of the future lease payment, which is somewhat equivalent to the purchase price of the assets.
• C)Bonds sold at par would be nearly equivalent to the present value of the future lease payments.
• D)The specific accounts affected by the transactions would be the same.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Raw Materials

Basic materials that are used in the production process to manufacture goods and products.

Manufacturing Costs

The total expenses involved in making a product, including materials, labor, and overhead costs.

Lot Ticket

A document prepared to show the movement of materials or products between departments. Also called move ticket.