Operating leases are financial statement examples of off-balance sheet financing.

Question

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Operating leases are a form of off-balance sheet financing because they are not recorded as assets or liabilities on the balance sheet. Instead, they are only disclosed in the footnotes of financial statements. This means that the company doesn't have to show the full extent of its obligations and can present a more favorable financial position to investors and creditors.

Operating Leases Are Financial Statement Examples of Off-Balance Sheet Financing