Which of the following statements regarding leases is false? A) Lease agreements are a popular form of financing the purchase of assets because leases do not require a large initial outlay of cash. B) Accounting recognizes two types of leases-operating and capital leases. C) If a lessor classifies a lease as a capital lease, then the lessee records a lease liability on its balance sheet. D) If a lease is classified as an operating lease, the lessee records a lease liability on its balance sheet.

Question

Quizplus · Accepted Answer

If a lease is classified as an operating lease, the lessee does not record a lease liability on its balance sheet. Operating leases are treated as rental expenses and are not recognized as assets or liabilities on the lessee's balance sheet.

Which of the Following Statements Regarding Leases Is false