Which of the Following Statements Regarding Leases Is Correct

question 182

Multiple Choice

Which of the following statements regarding leases is correct?

• A) Capital leases are favored over operating leases.
• B) A debit balance in the Leased Asset account on the balance sheet indicates an operating lease.
• C) Title is transferred to the lessee at the end of an operating lease term.
• D) Operating leases require the lessee to make rent payments.

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Definitions:

Perfect Competition

A market structure characterized by an infinite number of buyers and sellers, homogenous products, and no barriers to entry or exit, leading to price takers rather than price makers.

Efficiency

The ability to achieve a desired result or work output with minimum wasted effort or expense.

Equity

A measure of ownership in a company or asset, typically represented by shares that entitle holders to a proportion of the company's profits.

Voluntary Exchange

A transaction where two parties mutually agree to trade goods, services, or resources, typically to the perceived benefit of both.