The Four Criteria Provided in GAAP for Distinguishing a Capital

question 117

Multiple Choice

The four criteria provided in GAAP for distinguishing a capital lease from an operating lease do not include:

• A)The agreement specifies that ownership transfers at the end of the lease term.
• B)The collectibility of the lease payments must be reasonably predictable.
• C)The agreement contains a bargain purchase option.
• D)The noncancelable lease term is 75% or more of the useful life of the leased asset.

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Definitions:

Discretionary Fiscal Policy

Fiscal policy based on judgment by policymakers rather than set by predetermined rules, aiming to influence demand through changing government spending and taxation.

Clinton

A reference to Bill Clinton, the 42nd president of the United States, serving from 1993 to 2001, known for economic policies leading to budget surpluses and welfare reform.

Stimulus Package

A package of economic measures put together by a government to stimulate a struggling economy, typically including tax cuts, spending increases, and monetary policy adjustments.

High-Income Households

Families or individuals with earnings significantly above the average for a given area, often associated with higher consumption and investment capacities.