Which of the Following Statements Is FALSE

question 19

Multiple Choice

Which of the following statements is FALSE?

• A)Most financial analysts and sophisticated investors consider operating leases (which must be listed in the footnotes of the financial statements)to be additional sources of leverage.
• B)By carefully avoiding the four criteria that define an operating lease for accounting purposes,a firm can avoid listing the long-term lease as a liability.
• C)Because a lease is equivalent to a loan,the firm can increase its actual leverage without increasing the debt-to-equity ratio on its balance sheet.
• D)For most large corporations,the amount of leverage the firm can obtain through a lease is unlikely to exceed the amount of leverage the firm can obtain through a loan.

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Definitions:

Economic Systems

The methods and principles societies use to allocate scarce resources and distribute goods and services, including capitalism, socialism, and communism among others.

Command Economic System

In this type of economic structure, a central government or authority is responsible for making decisions about how goods and services are produced and distributed.

Goods And Services

Physical products and intangible activities that fulfill the needs or wants of consumers, forming the basis of all economic activity.

Production Possibilities Curve

A graphical representation that shows the different combinations of two goods or services that can be produced within a given resource constraint.