All of the Following Statements Regarding Leases Are True Except

question 231

Multiple Choice

All of the following statements regarding leases are true except:

• A) For a capital lease the lessee records the leased item as its own asset.
• B) For an operating lease the lessee reports the lease payments as rental expense.
• C) For a capital lease the lessee depreciates the asset acquired under the lease, but for an operating lease the lessee does not.
• D) Capital leases create a long-term liability on the balance sheet, but operating leases do not.
• E) Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.

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Definitions:

Percentage Change

A mathematical calculation that determines the degree of change over time as a proportion of the original value, often used to measure growth or decline in economic data.

Real GDP

The calculation of a nation's economic production accounting for variations in prices, representing the actual value of all goods and services generated.

Nominal GDP

Nominal GDP refers to the market value of all final goods and services produced within a country in a given period, using current prices without adjusting for inflation.

Real GDP

Gross Domestic Product adjusted for inflation, giving an accurate measure of an economy's size and how it's growing over time.