Accounting Multiple Choice Question – 13 February 2025

Keith is a financial consultant and has made the following statements about finance leases to his clients in newsletter:

• Statement 1 The lessor is responsible for maintenance of the asset
• Statement 2 The agreement may split the lease term into a primary period and a secondary period
• Statement 3 The capital value of the asset must be shown on the lessee’s statement of financial position
• Statement 4 The leasing company is normally a bank or finance house

Which of these statements are true?

Select ONE answer:

1. Statements 1, 2 and 3 only
2. Statements 2, 3 and 4 only
3. Statements 1, 2 and 4 only
4. Statements 1, 3 and 4 only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Under a finance lease, the risks and rewards of ownership are transferred to the lessee, who will therefore normally be responsible for maintenance.
3. Not correct
4. Not correct

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