Which of these is correct concerning the difference between an operating and a financial lease?

Question

Quizplus · Accepted Answer

An operating lease is where the lessor retains the risks and benefits of ownership. In contrast, a financial lease transfers the risks and benefits to the lessee. Therefore, option B is correct. Option A is incorrect as in a financial lease, the lessee is also required to make payments over a set period, and possession of the asset can eventually be transferred to the lessee. Option C is also incorrect as there is no specific timeframe for either type of lease, and the classification is based on the nature of the lease agreement. Option D is also incorrect as only option B provides a correct statement about the differences between financial and operating leases.

Which of These Is Correct Concerning the Difference Between an Operating