All of the Following Statements Regarding Leases Are True Except

question 231

Multiple Choice

All of the following statements regarding leases are true except:

• A) For a capital lease the lessee records the leased item as its own asset.
• B) For an operating lease the lessee reports the lease payments as rental expense.
• C) For a capital lease the lessee depreciates the asset acquired under the lease, but for an operating lease the lessee does not.
• D) Capital leases create a long-term liability on the balance sheet, but operating leases do not.
• E) Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.

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Definitions:

Regressive Tax

A tax imposed in such a way that the tax rate decreases as the taxable amount increases, disproportionately affecting lower-income individuals.

Payroll Tax

Levies charged on employers or workers, typically based on a proportion of the wages that staff receive from their employers.

Labor Market

The labor market is an economic market in which workers seek employment and employers seek to hire workers, often influenced by factors like wages, demand, and qualifications.

Marginal Tax Rate

The rate at which the next dollar of taxable income is taxed, reflecting the incremental increase in tax paid on an additional dollar of income.