The Lessee in a Financial Lease Bears the Most of the Same

question 76

Multiple Choice

The lessee in a financial lease bears the most of the same risks and rewards as ownership except:

• A)he doesn't know how large his lease payments are.
• B)he has no tax shelter for his cash outflows.
• C)he has no access to capital gain from an extraordinary salvage value.
• D)he can cancel his obligations to a lessor with 30 days' notice.

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Definitions:

Bank Reconciliation

A bank reconciliation is a process that explains the difference between the bank balance shown in an organization's bank statement and the corresponding amount shown in the organization's own accounting records.

Credit Memo

A document issued by a seller that reduces the amount a buyer owes, typically related to returns or adjustments.

Note Receivable

A financial asset representing a written promise to receive a certain amount of money at a future date or on demand.