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 leases 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. This is because operating leases are treated as rental expenses and not as a purchase of assets financed through a lease agreement.

Which of the Following Statements Regarding Leases Is False