Which of the Following Statements Characteristic of Leases

question 53

Multiple Choice

Which of the following statements characteristic of leases?

• A) Lease agreements are not a popular form of financing the purchase of assets because leases require a large initial outlay of cash.
• B) Accounting recognizes two types of leases-operating and finance.
• C) If a lessor classifies a lease as a finance lease, the lessor records a lease liability on its income statement.
• D) If a lease is classified as an operating lease, the lessee records an asset on its balance sheet.

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Definitions:

Repair

The action of fixing or restoring something that is broken or damaged.

Possession

The state of having, owning, or controlling something, legally or factually.

Carrier

A business that undertakes to transport persons, goods, or both.

Right to Inspect

The authorized capacity to examine or review something for accuracy, quality, or condition.