Which of the Following Statements Is False

question 28

Multiple Choice

Which of the following statements is false?

• A) The lease-equivalent loan is the loan that is required on the purchase of the asset that leaves the purchaser with the same obligations as the lessor would have.
• B) Lease obligations themselves could trigger financial distress.
• C) When a firm enters into a lease, it is committing to lease payments that are a fixed future obligation of the firm.
• D) When a firm leases an asset, it is effectively adding leverage to its capital structure (whether or not the lease appears on the balance sheet for accounting purposes).

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Definitions:

-logy

A suffix used to indicate the study or science of a particular subject.

Milliliter

A metric unit of volume equal to one-thousandth of a liter, commonly used to measure liquids.

Thousandth

A unit or measure representing one part in a thousand of something.

Liter

A metric unit of volume equal to 1000 cubic centimeters or approximately 0.26 U.S. gallons.