CLFP EXAM SCRIPT COMPREHENSIVE TEST
BANK REVIEW SHEET SOLVED QUESTIONS
AND ANSWERS
◉ Bailment. Answer: Delivery of property from a bailor to a bailee
with an obligation by the bailee to return it.
◉ Book Accounting. Answer: Method of accounting used to report a
company's financial activity.
◉ Bundle Lease. Answer: A lease that includes additional services
such as maintenance, insurance and property tax that are paid by the
lessor.
◉ Business Lease. Answer: A lease in which the lessee has entered in
to it for business purposes.
◉ Capital Lease. Answer: A lease that has the characteristics of a
purchase agreement and meets the FASB 13 requirements.
◉ Chattel Mortgage. Answer: A lien placed on personal property for
the purposes of securing a debt.
,◉ Closed End Lease. Answer: A lease that DOES NOT contain a
purchase or renewal option. Lessee HAS TO RETURN the
equipment.
◉ Conditional Sales Contract. Answer: a. financing of property, title
which will pass only when the buyer has met their obligations. b.
lessee is treated as the owner of the asset for IRS (55-540; IF PETS),
but, clouds title by a lien until all terms are met.
◉ Consumer Lease. Answer: A lease in which the lessee enters to
acquire property for personal, family or household use.
◉ Direct Financing Lease. Answer: A capital lease that DOES NOT
give rise to manufacturers or dealer's profit (or loss) to the lessor.
◉ Discounted Lease. Answer: A lease in which the payment stream is
assigned by the lessor to a funding source in return for immediate
payment of the PV of the stream of payments.
◉ Dry Lease. Answer: A NET LEASE, traditionally for aircraft or
marine vessels, which requires the LESSEE TO PROCURE all
personnel, fuel and provisions necessary to operate the craft.
◉ Factoring. Answer: The assignment by a lessee of accounts
receivable to a lessor as collateral for a specified term and payment
amount resulting in liquidity to improve cash flow or make capital
acquisitions.
,◉ Finance Lease. Answer: A net lease, used to finance the use of
property for the majority of its useful life.
◉ Full Payout Lease. Answer: A lease in which the LESSOR
RECOVERS, through the lease payments, ALL COSTS incurred in
the lease plus an acceptable rate of return, WITHOUT reliance on the
leased property's RESIDUAL value.
◉ Installment Loan. Answer: Any loan, the terms of which call for
regular or irregular periodic payments, the sum of which will repay
the debt and interest.
◉ Lease Intended as security. Answer: A transaction in which the
form is a lease, but the substance is a conditional sale contract or a
loan with a security agreement on the property.
◉ Leveraged Lease. Answer: Any lease involving, at minimum, a
lessee, a lessor and a funding source from whom the lessor borrows a
significant portion of the cost of equipment and holds an (minimum of
20%) equity position.
◉ Master Lease. Answer: A document under which a lessee may add
additional schedules representing property later acquired, subject to
the same general terms and conditions.
, ◉ Money-over-Money Lease. Answer: A NON-TAX or CSC where
the title is intended to pass to the lessee at the end of the lease term.
◉ Municipal Lease. Answer: A lease to a municipality or government
agency, which isn't typically a true lease and from which the interest
earnings to the lessor are tax exempt.
◉ Net Lease. Answer: A lease in which all costs associated with use,
maintenance, insurance, and property taxes are PAID separately BY
the LESSEE (i.e. not included in rental payment).
◉ Non-tax Lease. Answer: 1. Any lease in which the lessee is, or will
automatically become, the owner during or at lease end, and, is
entitled to all of the tax beneifts of ownership (e.g. money-over-
money, CSC, purchase money security agreement, or lease intended
as security).
◉ Open-End Lease. Answer: A lease in which the LESSEE
GUARANTEES the future RESIDUAL value of the property to be
realized by the lessor at lease end.
◉ Operating Lease. Answer: Any lease that has the characteristics of
a usage agreement and also fails to meet any of the FASB 13 rules for
a capital lease.
◉ Purchase Money Security Interest. Answer: A security interest
granted in property to secure the payment of the purchase price of the
property.
BANK REVIEW SHEET SOLVED QUESTIONS
AND ANSWERS
◉ Bailment. Answer: Delivery of property from a bailor to a bailee
with an obligation by the bailee to return it.
◉ Book Accounting. Answer: Method of accounting used to report a
company's financial activity.
◉ Bundle Lease. Answer: A lease that includes additional services
such as maintenance, insurance and property tax that are paid by the
lessor.
◉ Business Lease. Answer: A lease in which the lessee has entered in
to it for business purposes.
◉ Capital Lease. Answer: A lease that has the characteristics of a
purchase agreement and meets the FASB 13 requirements.
◉ Chattel Mortgage. Answer: A lien placed on personal property for
the purposes of securing a debt.
,◉ Closed End Lease. Answer: A lease that DOES NOT contain a
purchase or renewal option. Lessee HAS TO RETURN the
equipment.
◉ Conditional Sales Contract. Answer: a. financing of property, title
which will pass only when the buyer has met their obligations. b.
lessee is treated as the owner of the asset for IRS (55-540; IF PETS),
but, clouds title by a lien until all terms are met.
◉ Consumer Lease. Answer: A lease in which the lessee enters to
acquire property for personal, family or household use.
◉ Direct Financing Lease. Answer: A capital lease that DOES NOT
give rise to manufacturers or dealer's profit (or loss) to the lessor.
◉ Discounted Lease. Answer: A lease in which the payment stream is
assigned by the lessor to a funding source in return for immediate
payment of the PV of the stream of payments.
◉ Dry Lease. Answer: A NET LEASE, traditionally for aircraft or
marine vessels, which requires the LESSEE TO PROCURE all
personnel, fuel and provisions necessary to operate the craft.
◉ Factoring. Answer: The assignment by a lessee of accounts
receivable to a lessor as collateral for a specified term and payment
amount resulting in liquidity to improve cash flow or make capital
acquisitions.
,◉ Finance Lease. Answer: A net lease, used to finance the use of
property for the majority of its useful life.
◉ Full Payout Lease. Answer: A lease in which the LESSOR
RECOVERS, through the lease payments, ALL COSTS incurred in
the lease plus an acceptable rate of return, WITHOUT reliance on the
leased property's RESIDUAL value.
◉ Installment Loan. Answer: Any loan, the terms of which call for
regular or irregular periodic payments, the sum of which will repay
the debt and interest.
◉ Lease Intended as security. Answer: A transaction in which the
form is a lease, but the substance is a conditional sale contract or a
loan with a security agreement on the property.
◉ Leveraged Lease. Answer: Any lease involving, at minimum, a
lessee, a lessor and a funding source from whom the lessor borrows a
significant portion of the cost of equipment and holds an (minimum of
20%) equity position.
◉ Master Lease. Answer: A document under which a lessee may add
additional schedules representing property later acquired, subject to
the same general terms and conditions.
, ◉ Money-over-Money Lease. Answer: A NON-TAX or CSC where
the title is intended to pass to the lessee at the end of the lease term.
◉ Municipal Lease. Answer: A lease to a municipality or government
agency, which isn't typically a true lease and from which the interest
earnings to the lessor are tax exempt.
◉ Net Lease. Answer: A lease in which all costs associated with use,
maintenance, insurance, and property taxes are PAID separately BY
the LESSEE (i.e. not included in rental payment).
◉ Non-tax Lease. Answer: 1. Any lease in which the lessee is, or will
automatically become, the owner during or at lease end, and, is
entitled to all of the tax beneifts of ownership (e.g. money-over-
money, CSC, purchase money security agreement, or lease intended
as security).
◉ Open-End Lease. Answer: A lease in which the LESSEE
GUARANTEES the future RESIDUAL value of the property to be
realized by the lessor at lease end.
◉ Operating Lease. Answer: Any lease that has the characteristics of
a usage agreement and also fails to meet any of the FASB 13 rules for
a capital lease.
◉ Purchase Money Security Interest. Answer: A security interest
granted in property to secure the payment of the purchase price of the
property.
