Which of the Following Companies Would Be More Likely to Use

question 67

Multiple Choice

Which of the following companies would be more likely to use a perpetual inventory system?

• A)Corner deli.
• B)Home Depot.
• C)James Dean,CPA.
• D)A manufacturer of custom sailboats.

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Definitions:

Leveraged Lease

A leasing arrangement in which the lessor uses borrowed funds to acquire the asset that is then leased out, allowing the lessor to benefit from tax advantages and leverage.

Operating Lease

A contract that allows for the use of an asset but does not transfer ownership of the asset to the lessee.

Capital Lease

A financial agreement where a lessee gains significant property rights, making it similar to owning the asset, for accounting purposes.

Direct Financing Lease

A type of lease agreement where the lessor effectively finances the leased asset for the lessee, recognizing interest income over the lease term.