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WorksheetsBUSINESS FIN CHAPTER 7
Total questions: 20
Worksheet time: 10mins
Which of the following is a benefit of leasing?
Ownership of the asset
Lower initial cost
Higher long-term cost
Which of the following is an example of an asset that can be leased?
Land
Office equipment
Stocks
Which of the following is a disadvantage of leasing?
Limited flexibility
Higher long-term cost
Tax benefits
What is a capital lease?
A lease where the lessee is responsible for maintenance
A lease where the lessee has the option to purchase the asset
A lease where the asset is considered to be owned by the lessee
Which of the following is true of a finance lease?
The lessor owns the asset
The lessee owns the asset
The asset is returned to the lessor at the end of the lease term
Which of the following is a factor that affects lease payments?
Inflation rate
Asset age
Interest rates
Which of the following is a common type of equipment leasing?
Land leasing
Vehicle leasing
Stock leasing
Which of the following is an advantage of leasing?
Limited liability
No upfront costs
Tax deductions
Which of the following is a disadvantage of leasing?
No tax benefits
Higher long-term cost
No flexibility
What is a sale and leaseback transaction?
The lessee sells an asset to the lessor and then leases it back
The lessor sells an asset to the lessee and then leases it back
The lessee sells an asset to a third party and then leases it back
What is residual value in a lease agreement?
The value of the asset at the end of the lease term
The value of the asset at the beginning of the lease term
The value of the asset after it has been fully depreciated
What is a master lease agreement?
A lease agreement that covers multiple assets
A lease agreement that covers a single asset
A lease agreement that can be terminated at any time
What is a sublease agreement?
A lease agreement between the lessee and a third party
A lease agreement between the lessor and a third party
A lease agreement between the lessee and the lessor
What is a leasehold improvement?
An improvement made to an asset by the lessor
An improvement made to an asset by the lessee
An improvement made to an asset by a third party
Which of the following is a factor that affects the cost of leasing?
Asset size
Asset location
Asset type
What is a security deposit?
An upfront payment made by the lessee to the lessor to cover potential damages
An upfront payment made by the lessor to the lessee to secure the lease
An amount of money paid by the lessor to the lessee at the end of the lease term
What is leasing?
A process of purchasing assets
A process of renting assets for a long-term period
A process of borrowing money from a bank
What is the main difference between leasing and renting?
In leasing, the asset can be purchased at the end of the lease term
In renting, the asset can be purchased at the end of the rental period
Leasing and renting are the same thing
What is the main advantage of leasing for businesses?
The ability to own the asset immediately
The ability to conserve cash flow and maintain liquidity
The ability to take advantage of tax deductions for depreciation
What is a lease payment?
The amount of money the lessor pays to the lessee
The amount of money the lessee pays to the lessor for the use of the asset
The amount of money the lessee pays to purchase the asset
