Which of the Following Statements Is False

question 57

Multiple Choice

Which of the following statements is false?

• A) Leases may include early cancellation options that allow the lessee to end the lease early (perhaps for a fee).
• B) The cost of the lease will depend on the asset's residual value, which is its book value at the end of the lease.
• C) Leases may allow the lessee to trade in and upgrade the equipment to a newer model at certain points in the lease.
• D) Leases may contain buyout options that allow the lessee to purchase the asset before the end of the lease term.

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Definitions:

Quick Assets

Highly liquid assets, including cash, accounts receivable, and marketable securities, which can be quickly converted into cash.

Short-Term Investments

Short-term investments are financial assets that are expected to be converted into cash within one year and are typically used by firms to manage surplus cash efficiently.

Current Receivables

Short-term financial assets that are due to be received within one year, typically from customers who owe the company money for goods or services provided.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.