Question

One difference between Operating and Financial lease is:

• A. There is often an option to but in operating lease
• B. There is often a call option in financial lease
• C. An operating lease is generally cancellable by lease
• D. A financial lease in generally cancellable by lease

Answer 1

The correct option is C An operating lease is generally cancellable by lease

A cancellable lease is generally an operating lease (rental ) that may be terminated by either the lessee or the lessor without penalty.

If a finance lease is terminated early, the lessee is held liable for the outstanding lease payments plus the leased asset 's residual value .