Financial leases are a source of financing in the sense that:
A)the lessor must find a source of financing to buy the asset.
B)the lessee must borrow money for his first lease payment.
C)the lessee avoids buying, but gets the use of the asset through financing.
D)the lessor can use the lease payments as collateral to borrow.

Question

Quizplus · Accepted Answer

Financial leases allow the lessee to avoid buying the asset upfront and instead get the use of the asset through financing. The lessor, on the other hand, must find a source of financing to buy the asset. The lessee's lease payments are not used as collateral by the lessor to borrow. Therefore, option C is the best choice.

Financial Leases Are a Source of Financing in the Sense