Under USGAAP, Compared with an Operating Lease, a Financial Lease Will

question 6

Multiple Choice

Under U.S.GAAP, compared with an operating lease, a financial lease will have:

• A)lower cash flow from operations (CFO)and higher cash flow from financing (CFF)
• B)higher CFO and lower CFF
• C)higher CFO and higher CFF
• D)the same CFO and CFF

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Definitions:

Proprietorship

A business structure owned by a single individual, where the owner is entitled to all profits and responsible for all debts and liabilities.

Business Entity Assumption

An accounting principle that treats a business as an entity separate from its owners, meaning its financial transactions are recorded distinctly from those of its owners or other businesses.

Economic Unit

An entity, such as an individual, household, or organization, considered in economic analysis and decision-making.

FASB

Financial Accounting Standards Board, an organization responsible for establishing accounting and financial reporting standards in the U.S.