When There Is No Necessity for a Preexisting Relationship Between

question 53

Multiple Choice

When there is no necessity for a preexisting relationship between buyer and seller, that transaction is more likely to be classified as:

• A)B2B
• B)B2C
• C)B2E
• D)Either B2B or B2C

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Definitions:

Direct Financing Lease

A leasing arrangement in which the lessor purchases an asset for the lessee and rents it out, with the lease payments designed to cover the original cost plus a profit margin.

Unearned Interest: Leases

Interest that has been collected on a lease agreement before it has been earned, usually according to the payment schedule.

Residual Value

The anticipated revenue from selling an asset once it has reached the end of its serviceable life.

Present Value Factors

Multipliers used to calculate the present value of a future amount of money or stream of cash flows, given a specific discount rate.