A Lease Is Accounted for as an Operating Lease If

question 1

True/False

A lease is accounted for as an operating lease if the present value of the lease payments is at least 90 percent of the fair value of the leased property.

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Definitions:

Fixed Costs

Expenses that do not change in the short term, regardless of the level of production or sales activity, such as rent or salaries.

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Breakeven Point

The point at which total cost and total revenue are equal, meaning no net loss or gain, and the business is not making a profit.

Price Ceiling

A government-imposed limit on the price charged for a product, to ensure that it remains affordable for consumers.