Blaze Corp

question 79

Multiple Choice

Blaze Corp., a car company, shared its costs of producing cars.It did so by introducing the production of car accessories that are used by customers to upgrade or customize their cars.Blaze Corp.started selling car accessories such as engine oils, wheels, and music player and thus shared its market research costs between cars and car accessories.This led to a definite decrease in the overall cost of production.This scenario best illustrates _____.

• A)economies of scale
• B)economies of finance
• C)economies of wealth
• D)economies of scope

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Definitions:

Operating Lease

A lease agreement for property or equipment that is considered a rental and is not recorded as an asset on the company's balance sheet.

GAAP

Generally Accepted Accounting Principles, a collection of commonly followed accounting rules and standards for financial reporting in the United States.

Lease Classification

The process of categorizing leases as either operating leases or finance (capital) leases based on criteria that affect the lessee's financial statements.

Leveraged Lease

A financing arrangement where the lessor uses borrowed funds to acquire an asset which is then leased to a lessee, allowing for tax benefits and risk distribution.