Which of the Following Is NOT a Reason for Leasing

question 46

Multiple Choice

Which of the following is NOT a reason for leasing rather than purchasing an asset?

• A) Avoiding a significant cash outlay for a down payment
• B) Avoiding the risks of obsolescence
• C) Avoiding the recognition of additional debt on the balance sheet
• D) All of these are reasons for leasing rather than purchasing an asset

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Definitions:

Dishonored Note

A promissory note that has not been paid by the issuer at the time of its due date.

Fully Paid

Fully Paid denotes a status where all required payments for a service or product have been completed, with no outstanding amounts due.

Allowance Account

An accounting provision used to create a reserve for accounts receivable that may not be collected in full.

Doubtful Accounts

Accounts receivable that a company believes might become uncollectible in the future, leading to potential losses.