An operating lease can best be deﬁned as:
A) A short term lease where the lessor is responsible for the insurance, tax and upkeep. Often cancellable on short notice.
B) A longer term, fully amortized lease under which the lessee is responsible for the upkeep. Usually not cancellable without penalty.
C) A ﬁnancial lease in which the lessor is the owner for tax purposes.
D) A ﬁnancial lease in which the lessee sells an asset to the lessor and then leases in back.
E) A ﬁnancial lease where the lessor borrows a substantial of the cost of the leased asset.

Question

Quizplus · Accepted Answer

An operating lease is a short-term lease where the lessor is responsible for insurance, tax, and upkeep. It is often cancellable on short notice. Option B describes a capital lease, and option C and D describe financial leases. Option E describes a leveraged lease.

An Operating Lease Can Best Be Deﬁned As