A(n) ________ lease is a contractual arrangement whereby the lessee agrees to make periodic payments to the lessor for five or fewer years for an asset's services. This type of lease may also be canceled at the option of the lessee.
A) financial
B) operating
C) capital
D) direct

Question

Quizplus · Accepted Answer

An operating lease is a short-term lease that typically lasts for five years or less and allows the lessee to use an asset without taking on the risks and obligations of ownership. The lessee makes periodic payments to the lessor in exchange for the use of the asset, and the lease can be canceled at the option of the lessee. This type of lease is often used for equipment or machinery that has a limited useful life and will be replaced or upgraded in the near future. Financial leases are long-term leases that transfer the risks and obligations of ownership to the lessee, while capital leases are similar to financial leases but are structured as a purchase agreement with the option to buy the asset at the end of the lease term. Direct leases are a type of lease financing where the leasing company purchases the asset and leases it directly to the lessee without involving any intermediaries.

A(n) ________ Lease Is a Contractual Arrangement Whereby the Lessee