Which of the Following Is Not True About Operating Leases

question 7

Multiple Choice

Which of the following is not true about operating leases and the firms that use them?

• A) Used by most firms to facilitate business operations
• B) Many operating leases are non-cancelable
• C) Firm is usually not interested in ownership
• D) Most operating leases are short term
• E) Most often used when firm wants freedom/flexibility

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Definitions:

Common Stock

Equity ownership in a corporation, with voting rights and the potential to receive dividends.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Stock Dividend

The payment of additional shares to shareholders instead of cash, usually at a fixed rate, often used by companies to conserve cash.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.