What Is the Difference Between an Operating Lease and a Finance

question 6

Essay

What is the difference between an operating lease and a finance lease?

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, or insurance premiums.

Negative Returns

A situation in which an increase in the amount of inputs used leads to a decrease in the level of output, often seen in cases of over-investment or inefficient production processes.

Worker

An individual who performs tasks or services for compensation; an employee.

Variable Cost

Costs that change in proportion to the activity or volume of output in production, such as raw materials and direct labor costs.