Lease Financing

Q.

What do you mean by Lease Financing ? Discuss its merits and demerits?

Q.

_____________ _ is an example of a fixed asset.

Q.

In lease financing, the owner of the assets is called the __________ while the party that uses the assets is known as the ______________.

1. Shareholder, lessor

2. Lessee, lessor

3. Lessor, lessee

4. Owner, lessee

Q.

A lease is a ____ agreement whereby one party, i.e. the owner of the asset, grants the other party the right to use the asset in return for a periodic payment.

1. Permanent

2. Temporary

3. Fixed

4. Contractual

Q.

The lessee never becomes the owner of the asset.

1. True

2. False

Q.

Lease rentals paid by the lessee are deductible for computing taxable profits.

1. True

2. False

Q.

Lease financing provides finance without diluting the ownership or control of the business.

1. True

2. False

Q. The owner of the assets is called the _______ while the party that used the asset is known as the ________.

1. Lessor, lessee
2. Lessee, lessor
3. Trader, lessee
4. None of the above

Q. The type of lease requiring an agreement between the financier and lessor is known as ________.

1. Sale and lease back
2. Financial lease
3. Leveraged lease
4. Operating lease

Q. The lessee pays a _________ periodic amount called lease rental to the lessor for the use of the asset.

1. Fixed
2. Both a and b
3. Fluctuating
4. None of the above

Q. Which of the following is a merit of lease financing?

1. All of the above
2. It enables the lessee to acquire the asset with a lower investment.
3. The risk of obsolescence is borne by the lesser.
4. The lease agreement does not affect the debt raising capacity of an enterprise

Q.

A lease arrangement may impose certain restrictions on the use of assets.

1. True

2. False

Q. Simple documentation makes it easier to finance assets, is a ________ of lease financing.

1. Limitation
2. Role
3. Function
4. Merit

Q. Lessor gets fixed amount of lease rental every year and they cannot increase this even if the cost of asset goes up.

1. True
2. False

Q. Lease financing provides finance diluting the ownership or control of business.

1. True
2. False

Q. Lease financing enables the lessee to acquire the asset with a ________ investment.

1. Lower
2. Both a and b
3. Higher
4. Medium

Q. Lease rentals paid by the lessee are deductible for computing taxable profits.

1. False
2. True

Q. While making the leasing decision, the cost of leasing an asset must be compared with the ________.

1. cost of owning the same
2. cost of renting the same
3. cost of selling the same
4. none of the above

Q. The _____ never becomes the owner of the asset.

1. hypothicatee
2. franchisee
3. lessee
4. bank

Q. Lease rentals paid by the lessee are deductible for computing taxable profits.

1. True
2. False

Q. A lease arrangement may impose certain restrictions on the use of assets.

1. True
2. False

Q. A lessor is a person who provides the assets on rent, and the lessee is the person who rents the assets from the lessor.

1. True
2. False