A Lease Where the Plan Is Temporary Use of an Asset

question 147

Multiple Choice

A lease where the plan is temporary use of an asset by the lessee with continued ownership of the asset by the lessor is called a(n) :

• A) capital lease.
• B) preferred lease.
• C) operating lease.
• D) purchased lease.

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Definitions:

Estimated Ending Inventory

An approximation of the value of inventory a company has on hand at the end of an accounting period.

Gross Profit Rate

A financial metric that represents the proportion of money left over from revenues after accounting for the cost of goods sold.

Retail Inventory Method

An accounting technique for estimating inventory value by using a proportion between the retail price and cost of goods.

Cost Ratio

A measure that compares a company's operating expenses to its revenue, indicating how efficiently it is managed by showing the percentage of sales that goes towards covering costs.