All of the Following Statements Are True with Regard to How

question 47

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

Represents the direct costs attributable to the production of the goods sold by a company.

August

The eighth month of the year in the Gregorian calendar.

Full Settlement

Full settlement is the process of completely resolving an obligation or debt through payment or another agreed-upon method, leaving no outstanding amounts.

Discount Period

The time frame in which a discount is offered for early payment on goods or services, or the period before a financial instrument reaches maturity.