Which of the Following Statements About Capital Leases Is Incorrect

question 56

Multiple Choice

Which of the following statements about capital leases is incorrect?

• A)Under a capital lease, the lessee's books do not report the leased asset.
• B)A capital lease is non- cancellable.
• C)A capital lease is a long- term financial obligation.
• D)Under a capital lease, the lessee records a lease liability at the beginning of the lease term.

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Definitions:

Selling Inventory

Selling inventory consists of the process in which businesses sell their stocked goods or merchandise to customers.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets to generate sales revenue.

Net Sales

Net Sales is the amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Accounts Receivables

Represents money owed to a company by its customers for goods or services delivered but not yet paid for.