Off balance sheet financing may involve either:
A) An operating lease.
B) A special purpose entity.
C) Both an operating lease and a special purpose entity.
D) Neither an operating lease nor a special purpose entity.

Question

Quizplus · Accepted Answer

Off balance sheet financing can involve both an operating lease and a special purpose entity. An operating lease is a lease agreement that does not transfer ownership of the asset to the lessee and therefore is not recorded on the balance sheet. A special purpose entity is a legal entity created to isolate and finance specific assets or operations, often through the use of securitization, which can also keep those assets off the balance sheet of the parent company.

Off Balance Sheet Financing May Involve Either