An operating lease:
A)Creates an asset and a liability on the balance sheet.
B)Is a form of off-balance sheet financing.
C)Is always preferable to a capital lease.
D)Transfers title to the asset being leased.

Question

Quizplus · Accepted Answer

Operating leases are a form of off-balance sheet financing, meaning that it does not create an asset or liability on the lessee's balance sheet. Instead, the lease payments are treated as an expense on the income statement.

An Operating Lease