An Operating Lease Can Best Be Defined As

question 25

Multiple Choice

An operating lease can best be defined as:

• A) A short term lease where the lessor is responsible for the insurance, tax and upkeep. Often cancellable on short notice.
• B) A longer term, fully amortized lease under which the lessee is responsible for the upkeep. Usually not cancellable without penalty.
• C) A financial lease in which the lessor is the owner for tax purposes.
• D) A financial lease in which the lessee sells an asset to the lessor and then leases in back.
• E) A financial lease where the lessor borrows a substantial of the cost of the leased asset.

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Definitions:

Outstanding Stock

The number of shares that have been issued by a company and are held by investors, including both public shareholders and company insiders or officers.

Common Stock

A form of corporate equity ownership, a type of security representing a claim on part of the company's assets and earnings.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividend payment preferences.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of stock rather than cash.