If the Equipment Is Leased and the Lease Is a True

question 32

Multiple Choice

If the equipment is leased and the lease is a true tax lease,there is ________,but the lease payments are ________.

• A) capital expenditure; an operating expense
• B) no capital expenditure; a depreciation expense
• C) capital expenditure; an amortization expense
• D) no capital expenditure; an operating expense

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Definitions:

Market Economy

An economic system where supply and demand from consumers and producers determine the production of goods and services.

Free Stuff

Items or services offered without charge, usually as part of a promotional strategy or as incentives.

Private Good

A type of good that is rivalrous and excludable, meaning its consumption by one individual prevents others from consuming it.

Common Resource

A type of good that provides users with tangible benefits, but which is available to everyone, such as air, water, and fish in the open sea, leading to potential overuse problems.