Distinguishing between operating and finance leases is due in large part to the accounting concept of:
A) Conservatism.
B) Materiality.
C) Substance over form.
D) Historical cost.

Question

Quizplus · Accepted Answer

The accounting concept of Substance over form requires that transactions be recorded based on their economic substance rather than their legal form. This concept is particularly relevant in distinguishing between operating and finance leases, as it requires companies to consider the underlying substance of the lease arrangement, rather than solely relying on the legal form of the lease contract.

Distinguishing Between Operating and Finance Leases Is Due in Large