Prior to FASB No.13,leasing could be used

Question

Quizplus · Accepted Answer

Prior to FASB No.13, companies could use leasing to finance assets without recording the liability on the balance sheet, which allowed them to improve their financial ratios and avoid breaching debt covenants. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect because lease payments were expensed on the income statement even before FASB No.13, leasing was not limited to large corporations, and the advantages of leasing were significant before and after the standard.

Prior to FASB No.13,leasing Could Be Used