Which of the Following Statements Characterizes an Operating Lease

question 162

Multiple Choice

Which of the following statements characterizes an operating lease?

• A) The lessee reports cash outflows as financing activities.
• B) The lessor records depreciation and lease revenue.
• C) The lessor transfers title at the end of the lease term.
• D) The lessee has an option to purchase the leased assets and is reasonably sure to exercise the option.

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Definitions:

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs, of a manufacturing process. Costs are assigned to products, usually in a large batch, which might include an entire month's production.

Job-Order Costing

A costing method used in manufacturing, where costs are assigned to specific jobs or batches, ideal for customized orders.

Custom Jewelry

Jewelry pieces that are specially designed and crafted according to the specifications provided by a customer.

Weighted-Average Method

This inventory costing method assigns the average cost of goods available for sale during the period to both ending inventory and cost of goods sold.