-31) ABC, CAH and MCK all make use of operating leases regard to the use use of
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Question
-31) ABC, CAH and MCK all make use of operating leases regard to the use use of operating leases. Which of the following is true with leases? A the ce of operating lease A. the 6. the companies are int C. the conversion of operating D. the conversion of operating companies appear to me more leveraged than they actually are? eases to capital leases will increase the return on assets ng leases to capital leases will have no impact on return on equity entionally trying to mislead readers of their financial statements capital leases capital leases 32) Treasury stock is to equity as: A. accumulated depreciation is to total assets B. long-term debt is to total liabilities C. net income is to retained earnings D. retained earnings is to equity.Explanation / Answer
31. ABC, CAH and MCK all make use of operating leases. Which of the following is true with regard to use of operating lease?
Answer: Option D. the Conversion of operating leases to capital leases will have no impact on return on equity.
Explanation
The return on equity will be unaffected since neither the net income nor the book value of equity will be affected by the re-categorization of operating lease expenses.
32. Treasury Stock is to equity as:
Answer: Option A accumulated depreciation is to total assets
As Treasury stock is presented as total issued capital less treasury stock to have net outstanding equity capital like Total asset Value less Accumulated depreciation equals to Net book value of assets.
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