In general,which statement is correct?
A) Lessees prefer finance leases.
B) Lessees prefer operating leases.
C) Operating leases are more favourable to the lessor in the short term.
D) Finance leases are more favourable to the lessee in the short term.

Question

Quizplus · Accepted Answer

Lessees generally prefer operating leases as they offer more flexibility and lower risk compared to finance leases. Operating leases allow lessees to use assets for a shorter period and return them without any obligation to purchase them. This can be useful for businesses that may need to upgrade or replace their assets frequently. Finance leases, on the other hand, may be more favourable to lessors in the short term as they often involve a higher profit margin and a longer lease term with a commitment from the lessee to purchase the asset at the end of the lease term.

In General,which Statement Is Correct