A lease is treated as an operating expense and is not carried as a liability on a company's balance sheet.

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A lease is an operating expense and is not carried as a liability on a company's balance sheet because it is considered a "pay-as-you-go" expense. This means that the company does not have to record the entire lease obligation as a liability on its balance sheet, but instead can record the lease payments as they are made.

A Lease Is Treated as an Operating Expense and Is