chap026 - Chapter 026 Leasing Multiple Choice Questions 1....

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Chapter 026 Leasing Multiple Choice Questions 1. The user of an asset in a leasing arrangement is called the: A . lessee. b. lessor. c. guarantor. d. trustee. e. manager. SECTION: 26.1 TOPIC: LESSEE TYPE: DEFINITIONS 2. The owner of an asset in a leasing arrangement is called the: a. lessee. B . lessor. c. guarantor. d. trustee. e. manager. SECTION: 26.1 TOPIC: LESSOR TYPE: DEFINITIONS 3. A shorter-term lease under which the lessor is responsible for the insurance, taxes, and upkeep while the lessee may have the right to cancel the lease on short notice is called a(n) _____ lease. a. open b. straight C . operating d. financial e. tax-oriented SECTION: 26.1 TOPIC: OPERATING LEASE TYPE: DEFINITIONS 26-1
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Chapter 026 Leasing 4. A longer-term, fully-amortized lease under which the lessee is responsible for insurance, taxes, and upkeep and which the lessee generally cannot cancel without incurring a penalty is called a(n) _____ lease. a. open b. straight c. operating D . financial e. tax-oriented SECTION: 26.1 TOPIC: FINANCIAL LEASE TYPE: DEFINITIONS 5. A financial lease in which the lessor is the owner for tax purposes is called a(n) _____ lease. a. open b. straight c. operating D . tax-oriented e. tax-exempt SECTION: 26.1 TOPIC: TAX-ORIENTED LEASE TYPE: DEFINITIONS 6. A financial lease in which the lessor borrows a substantial fraction of the cost of the leased asset on a nonrecourse basis is called a(n): A . leveraged lease. b. sale and leaseback arrangement. c. operating lease. d. tax-oriented lease. e. straight lease. SECTION: 26.1 TOPIC: LEVERAGED LEASE TYPE: DEFINITIONS 26-2
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Chapter 026 Leasing 7. A financial lease in which the lessee sells an asset to the lessor and then leases the asset from the lessor is called a(n): a. leveraged lease. B . sale and leaseback. c. operating lease. d. tax-oriented lease. e. straight lease. SECTION: 26.1 TOPIC: SALE AND LEASEBACK TYPE: DEFINITIONS 8. The net present value that is calculated when deciding whether to lease an asset or to buy it is called the: a. open interest net present value. b. depreciated net present value. C . net advantage to leasing. d. profitability index. e. average accounting ratio for leasing. SECTION: 26.5 TOPIC: NET ADVANTAGE TO LEASING TYPE: DEFINITIONS 9. Which one of the following statements is correct concerning the lease versus buy decision? a. The lessor is primarily concerned with returning the asset at the end of the lease term without incurring any additional charges. b. The lessor is primarily concerned about the use of the asset. c. If Dell Computer became a lessor of its own computers it would be engaging in direct leasing. d. A firm should always purchase, rather than lease, any asset that has a projected positive salvage value at the end of the relevant period of use. E . Lessors provide a source of financing for lessees. SECTION: 26.1 TOPIC: LEASING VERSUS BUYING TYPE: CONCEPTS 26-3
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Chapter 026 Leasing 10. In a direct lease, the lessor: I. is the end user of the asset. II. rents the leased asset from the manufacturer.
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chap026 - Chapter 026 Leasing Multiple Choice Questions 1....

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