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Accounting

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Leases

easy
Accounting

Capital Lease is also called __________?

A
Operating Lease
B
Financial Lease
C
Both A & B
D
None of these
Explanation and memory cue

A Capital Lease is also known as a Financial Lease because it transfers substantially all the risks and rewards of ownership to the lessee, unlike an Operating Lease which does not.

2

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Accounting Basics

easy
Accounting

Which of the following balances does a contra-asset account typically show?

A
Credit
B
Debit
C
Negative
D
Positive
Explanation and memory cue

A contra-asset account typically carries a credit balance, which offsets the debit balance of the related asset account. This is because contra-asset accounts reduce the value of the asset they are associated with.