Which of the Following Statements with Regards to Operating Leases

question 7

Multiple Choice

Which of the following statements with regards to operating leases is false?

• A)They are essentially rental agreements.
• B)They are cancellable by the lessor at little cost.
• C)They are often over a short duration.
• D)The lessee is usually able to return the asset at short notice.

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Definitions:

Par Value

The nominal or face value assigned to a share of stock or a bond by the issuer.

Noncumulative

A type of preferred stock on which dividend payments are not accumulated if they are not declared.

Nonparticipating

In the context of financial securities, refers to preferred shares or other financial instruments that do not have the right to share in the corporation's earnings beyond a certain amount.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividends.