All leases are classified as either
A) capital leases or long-term leases
B) capital leases or operating leases
C) operating leases or current leases
D) long-term leases or current leases

Question

Quizplus · Accepted Answer

Leases are classified as either capital leases or operating leases, based on the terms and conditions of the lease agreement. The classification of the lease has significant implications for both lessees and lessors in terms of accounting, financial reporting, and tax treatment. Capital leases are recorded as assets and liabilities on the balance sheet, while operating leases are not. Hence, option B is the correct choice.

All Leases Are Classified as Either