Questions
Lessor gets fixed amount of lease rental every year and they cannot increase this even if the cost of asset goes up.
- True
- False
Lease rentals paid by the lessee are deductible for computing taxable profits.
- True
- False
Match the statements in List-I with the types of lease in the List-II as follows:
| List - I | List - II |
|---|---|
| (a) Lessor transfers all risks and rewards of an asset to the lessee. | (i) Indirect lease |
| (b) Lessor transfers the assets to the lessee but bears the cost of maintenance | (ii) Operating lease |
| (c) The owner of the asset sells it to turn leases it back to the owner (now lesser) | (iii) Finance lease |
| (d) Lessor owns/ acquires the assets that are leased to a given lesser. | (iv) Direct lease |
- $(a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)$
- $(a) - (i), (b) - (iv), (c) - (ii), (d) - (iii)$
- $(a) - (iii), (b) - (ii), (c) - (i), (d) - (iv)$
- $(a) - (iv), (b) - (i), (c) - (iii), (d) - (ii)$
The demand for leasing is steadily increasing as economic growth can be maintained even during the period of depression.
- True
- False
The _____ never becomes the owner of the asset.
- lessee
- bank
- hypothicatee
- franchisee
Lease financing provides finance diluting the ownership or control of business.
- True
- False
The normal business operations may be affected in case the lease is not renewed.
- True
- False
Lease financing enables the lessee to acquire the asset with a ________ investment.
- Higher
- Medium
- Lower
- Both a and b
While making the leasing decision, the cost of leasing an asset must be compared with the ________.
- cost of owning the same
- cost of selling the same
- cost of renting the same
- none of the above
The risk of obsolescence is borne by the _________.
- Lessor
- Lessee
- Both a and b
- None of the above
The owner of the assets is called the _______ while the party that used the asset is known as the ________.
- Lessor, lessee
- Lessee, lessor
- Trader, lessee
- None of the above
Simple documentation makes it easier to finance assets, is a ________ of lease financing.
- Function
- Role
- Merit
- Limitation
_________ is deprived from the residual value of the asset.
- Lessee
- Lessor
- Both a and b
- None of the above
The lessee pays a _________ periodic amount called lease rental to the lessor for the use of the asset.
- Fixed
- Fluctuating
- Both a and b
- None of the above
Which of the following is a merit of lease financing?
- It enables the lessee to acquire the asset with a lower investment.
- The risk of obsolescence is borne by the lesser.
- The lease agreement does not affect the debt raising capacity of an enterprise
- All of the above