An Eight-Year Capital Lease Specifies Equal Minimum Annual Lease Payments

question 66

Multiple Choice

An eight-year capital lease specifies equal minimum annual lease payments.Part of this payment represents interest and part represents a reduction in the net lease liability.The portion of the minimum lease payment in the fourth year applicable to the reduction of the net lease liability should be

• A) the same as in the third year.
• B) less than in the third year.
• C) less than in the fifth year.
• D) more than in the fifth year.

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Definitions:

Consumer Situations

Scenarios involving the interaction or transaction between individuals purchasing goods or services for personal use and the businesses providing them.

Risk

The possibility of loss, damage, or an adverse outcome from an action or event.

Sale of Goods

Refers to the transaction of purchasing and selling tangible personal property.

Risk

The potential for losing something of value, either physically, financially, or emotionally, due to a particular action or event.