Which of the Following Is/are True About Operating Leases

question 23

Multiple Choice

Which of the following is/are true about operating leases?
I.The lease is generally for a short duration.
II.The lessee is required to provide maintenance for the asset.
III.The lessee assumes any risk of obsolescence.

• A)I only
• B)II and III
• C)I and III
• D)I and II

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Definitions:

Sinking Funds

Reserves of money set aside by a corporation or government to repay a debt or bond issue at or before maturity.

Bondholder

An investor who owns bonds issued by a corporation or government, lending them money in exchange for periodic interest payments and the return of principal at maturity.

Issuer

An entity that issues or proposes to issue any security, or the entity on whose behalf the securities are issued.

Times-Interest-Earned Ratio

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt.