Of the Following Choices, Which Best Describes the Operating Expenses

question 16

Multiple Choice

Of the following choices, which best describes the operating expenses that you would expect to be the paid by the tenant in a net lease agreement?

• A) No operating expenses
• B) Only property taxes
• C) Both property taxes and insurance
• D) All operating expenses

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Definitions:

Bargain Purchase Option

An option in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease term at a price significantly lower than the expected fair market value.

Lease Term

The fixed, non-cancellable period of time for which a lease is agreed upon between the lessee and the lessor.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting.

Capital Lease

A long-term lease agreement that designates the lessee (the person who rents the asset) as having the financial responsibilities and benefits of ownership.