1. How will a 20-year lease obligation appear on the lessee's statement of financial position?

a.as a long-term asset for an operating lease

b.as a long-term liability, only if a finance lease

c.as a long-term liability for any lease, operating or finance

d.as a long-term liability, only if an operating lease

2. Which of the following statements is characteristic of leases?

a.Accounting recognizes two types of leasesoperating and finance.

b.If a lessor classifies a lease as a finance lease, the lessor records a lease liability on its statement of earnings.

c.Lease agreements are not a popular form of financing the purchase of assets because leases require a large initial outlay of cash.

d.If a lease is classified as an operating lease, the lessee records an asset on its statement of financial position.