Prior to January 2019, operating leases were:
A)a form of off-balance-sheet financing
B)included only in the notes to financial statements
C)regarded as misleading with respect to an entity's true obligations
D)all of the above

Question

Quizplus · Accepted Answer

Prior to January 2019, operating leases were a form of off-balance-sheet financing, which means that they were not recorded as liabilities on the balance sheet. They were only included in the notes to financial statements, which made it difficult for investors to fully understand an entity's true obligations. This practice was regarded as misleading, which is why the Financial Accounting Standards Board (FASB) issued new lease accounting standards that require operating leases to be recorded on the balance sheet.

Prior to January 2019, Operating Leases Were