All Except Which of the Following Are Attributes of Operating

question 28

Multiple Choice

All except which of the following are attributes of operating leases?

• A) The lease period normally equals the economic life of the asset.
• B) Lease payments under the initial lease contract are insufficient to recover the full cost of the asset for the lessor.
• C) Leases are cancelable.
• D) Maintenance and insurance normally are the responsibility of lessor.

---

Definitions:

Drawing Account

An account used to record withdrawals made by an owner from the business for personal use.

Owner's Capital Account

An equity account that represents the owner's invested capital plus any retained earnings or minus any withdrawals.

First Closing Entry

The first journal entry in the closing process that transfers revenue and the expense account balances to the owner’s capital account as either a net income or a net loss.

Owner's Equity

The residual interest in the assets of a business after all liabilities are deducted, essentially the owner's share of the company's net assets.