If a Lease Is Not Capitalized

question 20

Multiple Choice

If a lease is not capitalized,
1) the return on assets is overstated
2) the return on assets is understated
3) the use of financial leverage is overstated
4) the use of financial leverage is understated​

• A)1 and 3​
• B)​1 and 4
• C)​2 and 3
• D)​2 and 4

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Definitions:

Surplus

An excess of what is needed, often referring to goods, funds, or resources beyond what is used.

Tariff

A levy placed by the government on goods being imported or exported.

Consumer Surplus

The distinction between the theoretical spending capacity of consumers on a good or service and their actual spending.

Trade

The exchange of goods, services, or both between two or more parties, either domestically or internationally.