The Best Approach to Determine Whether a Capital Lease Has

question 38

Multiple Choice

The best approach to determine whether a capital lease has been "kept off the books" is to do which of the following?

• A)review all capital lease agreements that have been recorded.
• B)examine the canceled checks for all recorded capital leases.
• C)review all major lease agreements to determine whether there are other leases to be capitalized.
• D)physically examine the asset and trace it to the general ledger.

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Definitions:

Reduce Costs

Strategies or actions taken by businesses to decrease expenses and improve profitability without compromising the quality of their products or services.

Allocation

The process of distributing resources, goods, or services according to a specific plan or system.

Productivity

A measure of average output or real output per unit of input. For example, the productivity of labor is determined by dividing real output by hours of work.

Land Taxes

Taxes imposed on property owners based on the value of their land, commonly used by governments as a source of revenue.