Financial Accounting Standards Board (FASB) Statement #13 Requires That for an Unqualified

question 30

Multiple Choice

Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting which of the following?

• A) residual value as a fixed asset
• B) residual value as a liability
• C) present value of future lease payments as an asset and also showing this same amount as an offsetting liability
• D) undiscounted sum of future lease payments as an asset and as an offsetting liability

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Definitions:

Journal Entry

A record in accounting that represents a transaction and its effect on various accounts, used to capture financial activities in the books.

Sacred Church

A term not typically used in finance or accounting; it likely refers to a religious institution considered holy or consecrated.

Life Insurance Receivable

An asset representing the amount due to a beneficiary upon the death of the insured person, or the cash value of a policy owned by a company.

Rental Income

Earnings received from renting out property or other assets.