Which One of the Following Characteristics Does Not Distinguish Financial

question 46

Multiple Choice

Which one of the following characteristics does not distinguish financial leases from operating leases?

• A)Financial lease analysis compares leasing to borrowing
• B)Financial leases are not cancelable
• C)Operating leases involve real physical assets
• D)Operating leases do not extend over the economic life of the asset

---

Definitions:

Capital Investment

Funds invested in a business with the expectation of future benefits, such as acquiring new equipment, buildings, or other resources to generate income.

Net Present Value

A method used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period of time.

Capital Investment

Funds spent by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment to increase operational efficiency.

Future Net Cash Flows

The estimated total cash income minus the total cash expenses expected over a future period.