Which of the Following Statements Regarding Leases Is False

question 65

Multiple Choice

Which of the following statements regarding leases is false?

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

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Definitions:

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, including factory rent, salaries of permanent staff, and equipment depreciation.

Machine-Hours

A measure of the amount of time machines are operated in the manufacturing process, used as a basis for allocating costs.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a selected activity base such as labor hours or machine hours.

Direct Labor-Hours

The total hours of labor directly involved in manufacturing a product, used in calculating labor costs and efficiency in production.