respond to: There are two primary categories of leases: operational leases and capital $($or finance$)$ leases. An operating lease is a contractual agreement that provides the right to utilize an asset without the transfer of ownership $($Brigham & Ehrhardt, $2020).$ Short$-$term leases provide flexibility, enabling lessees to update or swap assets more regularly. Off$-$balance sheet financing enhances the company's financial condition by making it look more robust. Typically, the lessor has responsibility for upkeep and repairs. However, there are also drawbacks, including the lack of an ownership option and potentially greater long$-$term expenses, since total lease payments may surpass the cost of acquiring the item. A capital lease is a contractual arrangement in which the lessor relinquishes ownership rights to the lessee at the completion of the lease term $($Brigham & Ehrhardt, $2020).$ It provides benefits like ownership, depreciation, and tax advantages. Nevertheless, it may have an adverse effect on a company's financial statement, giving the impression of reduced strength, and the lessee is usually accountable for maintenance and repairs. The leasing commitments might also have an impact on the company's financial situation. Operating leases are generally regarded as presenting the lessee with a reduced obligation to assume risk. The lessee is exempt from the responsibility of maintaining and repairing the asset, and the lease may be ended with reasonable simplicity if the asset becomes unnecessary. Conversely, in the case of a capital lease, the lessee has more risk since they have the responsibility for the upkeep and repairs of the asset, and they are obligated to adhere to the lease agreement for a longer duration.