An Operating Lease

question 21

Multiple Choice

An operating lease:

• A)Creates an asset and a liability on the balance sheet.
• B)Is a form of off-balance sheet financing.
• C)Is always preferable to a capital lease.
• D)Transfers title to the asset being leased.

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Definitions:

Economic Function

The role or purpose that an economic activity serves in the broader economy, contributing to overall economic performance.

Profits and Losses

Financial gains achieved when revenue exceeds expenses, or deficits incurred when expenses outstrip revenue.

Real Assets

Physical or tangible assets that have intrinsic value, such as real estate, commodities, or natural resources.

Coincidence of Wants

A situation in barter economies where two parties each possess an item the other wants, allowing for a direct exchange without the need for a medium of exchange like money.