On a reconciliation of net income to eash from operations, depreelation is added back to net income as depreciation

a$.$ is a direct outflow of eash.

b$.$ reduces net income but does not involve an outflow of oash.

c$.$ reduces net income and involves an outflow of cash.

d$.$ is an outflow of cash to a fund established for the replacement of assets.

Generally accepted accounting principles require that certain lease agreements be accounted for as purchases. The theoretical basis for this treatment is that a lease of this type

a$.$ effectively conveys all of the benefits and risks incident to the ownership of property.

b$.$ is an example of form over substance.

c$.$ provides the use of the leased asset to the lessee for a limited period of time.

d$.$ must be recorded in accordance with the concept of cause and effect.

One of the four general criteria for a capital lease is that the present value at the beginning of the lease term of the minimum lease payments equals or exceeds

a$.$ the property's fair market value.

b$.90$ percent of the property's fair market value.

c$.75$ percent of the property's fair market value.

d$.50$ percent of the property's fair market value.

In a lease that is recorded as an operating lease by the lessee, the equal monthly rental payments should be

a$.$ allocated between interest expense and depreciation expense.

b$.$ allocated between a reduction in the liability for leased assets and interest expense.

c$.$ recorded as a reduction in the liability for leased assets.

d$.$ recorded as rental expense.

One of the four general criteria for a capital lease specifies that the lease term be equal to or greater than

a$.$ the estimated economic life of the property.

b$.90$ percent of the estimated economic life of the property.

c$.75$ percent of the estimated economic life of the property.

d$.50$ percent of the estimated economic life of the property.

For a capital lease, the amount recorded initially by the lessee as a liability should

a$.$ exceed the present value at the beginning of the lease term of minimum lease payments during the lease term.

b$.$ exceed the total of the minimum lease payments during the lease term.

c$.$ not exceed the fair value of the leased property at the inception of the lease.

d$.$ equal the total of the minimum lease payments during the lease term.

McCabe Institute leased a new machine having an expected useful life of $12$ years. The noncancelable lease term is $10$ years, and McCabe may exercise a purchase option at the end of the noncancelable term. The machine should be capitalized by McCabe and depreciated over

a$.10$ or $12$ years at McCabe's option.

b$.12$ years.

c$.10$ years.

d$.9$ years.

The lessee's balance sheet liability for a capital lease would be periodically reduced by the

a$.$ minimum lease payment.

b$.$ minimum lease payment plus the amortization of the related asset.

c$.$ minimum lease payment less the amortization of the related asset.

d$.$ minimum lease payment less the portion of the minimum lease payment allocable to interest.