Operating leases occur when the lessee essentially buys an asset and borrows the money through a lease to pay for the asset.

Question

Quizplus · Accepted Answer

This statement is incorrect as it describes both operating and capital leases as essentially the same thing. In reality, operating leases are a form of rental agreement where the lessee does not assume ownership of the asset, while capital leases transfer ownership and typically have higher financial obligations.

Operating Leases Occur When the Lessee Essentially Buys an Asset