Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 10 - Reporting and Analyzing Liabilities - Questions: 24

Answer

The operating leases are common off the balance sheet financing. Most lessees do not like to report leases on their balance sheet because the lease increases the total liability.

Work Step by Step

The liabilities of next year payments are also understated, and therefore all ratios calculated with current liability and total liability will give an incorrect figures.
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