What is a lease? Explain the difference between an operating lease and a finance lease.
What will be an ideal response?
A lease is a contractual agreement between a lessor (asset owner) and a lessee (asset renter or tenant) that grants the lessee the right to use the asset for a period of time in return for cash rent payments. Operating leases are short-term or cancelable leases in which the lessor retains the risks and rewards of ownership. The lessee in an operating lease Records a right-of-use asset and a lease liability. Finance leases are long-term or noncancelable leases by which the lessor transfers substantially all risks and rewards of ownership to the lessee. The lessee records the leased item as its own asset along with a lease liability at the start of the lease term. Each payment includes interest expense plus a payment on the lease liability. The lessee records depreciation expense on the leased asset.
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The funds of Lutsan City Bank decreased after the Federal Reserve cashed the checks that it received after selling government securities. As a result, the bank had to cut back on its loan offerings as it did not have sufficient funds to provide loans. This scenario exemplifies _____.
A. open market operations B. market monetarism C. reflation D. articles of incorporation
Specialty products are consumer products that
A. very few customers want or can afford to buy. B. consumers are willing to search for because they really want them. C. have elastic demand. D. are relatively expensive and purchased only rarely. E. All these answers are correct.
The times-covered ratio, which measures the degree to which managers use debt or equity to finance ongoing operations, is a type of ________ ratio.
A. profit B. liquidity C. current D. activity E. leverage
Which of the following is an objective of the NBO process?
A) to create value from intellectual capital and to share knowledge B) to predict the number of customers who will accept an offer C) to select a choice among a set of available options D) to connect the power of multiple computers working in parallel