A financial lease:
I.is generally a fully amortized lease.
II.usually requires the lessee to insure the asset.
III.is generally cancelable without penalty if the lessee provides 30 days advance notice.
IV.is referred to as a capital lease by accountants.
A)I and III only
B)II and IV only
C)I and II only
D)II, III, and IV only
E)I, II, and IV only

Question

Quizplus · Accepted Answer

A financial lease is typically a fully amortized lease (I) where the lessee is responsible for insuring the asset (II). It is not generally cancelable without penalty (III), making this statement incorrect. Financial leases are indeed referred to as capital leases by accountants (IV), making choices I, II, and IV correct.

A Financial Lease: I.is Generally a Fully Amortized Lease