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Home / Questions / Leases of short-term assets are operating leases, and leases of long-term assets are capit

Leases of short-term assets are operating leases, and leases of long-term assets are capit

Leases of short-term assets are operating leases, and leases of long-term assets are capital leases.

 

 

22.A capital lease is a lease of property, plant, or equipment that is in effect an installment purchase.

 

 

23.Accounting for capital leases can be thought of as similar to accounting for mortgage payments.

 

 

24.When a monthly mortgage payment is made and recorded, the debit to Mortgage Payable represents the reduction in the principal balance.

 

 

25.Under a defined contribution pension plan, retirement benefits are based entirely on the annual contribution to the fund plus earnings thereon.

 

 

26.Accounting for a defined benefit pension plan is simpler than accounting for a defined contribution plan.

 

 

27.Costs of postretirement benefits other than pension plans should be expensed when paid to the retired employee.

 

 

 

 

28.A capital lease represents both an asset and a liability to the lessee.

 

 

29.As the interest coverage ratio declines, the risk for creditors also declines.

 

 

30.Financial leverage refers to the issuance of stock to raise cash.

Dec 10 2019 View more View Less

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