Which of the Following Would Be Disadvantages of Leasing Facilities

question 31

Multiple Choice

Which of the following would be disadvantages of leasing facilities?

• A)When the lease period is over, you must return the asset to the lessor.
• B)Although the lessor can, at additional cost, extend a lease or sell you the asset, the lessor is under no obligation to do so.
• C)You will not have to continue to pay off the lease, even if you are actually using the equipment.
• D)A lease is a legal obligation and generally cannot be canceled.
• E)Over the long run, leasing costs more than owning because included in the lease payment is a profit to the lessor.

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Definitions:

Budgeted Balance Sheet

A prediction of a company’s financial position at the end of a specified period, incorporating anticipated assets, liabilities, and equity based on the budget.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period to manage liquidity and ensure adequate cash flow.