CLFP TERMS EXAM UPDATED EXAM SCRIPT
WITH COMPLETE ANSWERS
◉ 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.
WITH COMPLETE ANSWERS
◉ 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.
