Since Operating Leases Result in the Receipt of Services from an Asset

question 42

True/False

Since operating leases result in the receipt of services from an asset without increasing the assets or liabilities on a firm's balance sheet, leasing may result in misleading financial ratios.

---

Definitions:

Other Expense

Costs not directly tied to the production of goods or services, such as office supplies or utilities.

Interest Expenses

Costs incurred by an entity for borrowed funds, typically reflected in the income statement.

Selling Expenses

Costs incurred directly from the selling of products or services, such as advertising and sales commissions.

Merchandising Income

The profit generated from buying and selling goods.