GAAP Requires That Some Lease Agreements Be Accounted for as Purchases

question 154

Multiple Choice

GAAP requires that some lease agreements be accounted for as purchases. The theoretical justification for this treatment is that a lease of this type:

• A)Complies with the concept of form over substance.
• B)Reflects the relationship of cause and effect.
• C)Satisfies the concept of historical cost.
• D)Conveys most of the risks and benefits of property ownership.

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Definitions:

Magnetic Field

A region around a magnetic material or a moving electric charge within which the force of magnetism acts.

Law of Charges

A fundamental principle stating that like charges repel each other, while opposite charges attract each other.

Like Polarity

A situation in electrical systems where magnetic or electrical poles of the same kind face each other or are aligned.

Unlike Polarity

Refers to opposite electrical charges or magnetic poles that attract each other.