When a lessor receives cash on an operating lease, which of the following accounts is increased?
A)Interest Revenue: Leases
B)Lease Rental Revenue
C)Lease Receivable
D)Unearned Interest: Leases

Question

Quizplus · Accepted Answer

Cash received on an operating lease is recognized as Lease Rental Revenue, which increases the lessor's revenue account. A is incorrect because interest revenue is only recognized on finance leases, not operating leases. C is incorrect because lease receivable is the balance owed by the lessee on an operating lease, and does not increase when cash is received. D is incorrect because unearned interest would only increase if the lease was a finance lease with an interest component.

When a Lessor Receives Cash on an Operating Lease, Which