A suitable alternative to purchasing if a firm needs to use expensive assets such as equipment or vehicles; the leasing company owns the equipment and hires it out to the customer.

A suitable alternative to purchasing if a firm needs to use expensive assets such as equipment or vehicles; the leasing company owns the equipment and hires it out to the customer.

• A. Debentures
• B. Leasing
• C. Revenue expenditure
• D. Factoring

Answer: (B)

Leasing lets a firm use expensive assets without buying them. The leasing company owns the equipment and rents it to the firm in return for regular payments, so you get access to the asset without tying up large capital upfront. This is particularly useful when you need machinery or vehicles now but want to protect cash flow, avoid ownership risks, and possibly simplify maintenance arrangements. Debentures would raise funds to buy assets but don’t provide immediate use of the asset itself; revenue expenditure is ongoing costs and doesn’t acquire the asset; factoring relates to turning receivables into cash. So leasing is the option that fits the described situation.

Leasing lets a firm use expensive assets without buying them. The leasing company owns the equipment and rents it to the firm in return for regular payments, so you get access to the asset without tying up large capital upfront. This is particularly useful when you need machinery or vehicles now but want to protect cash flow, avoid ownership risks, and possibly simplify maintenance arrangements. Debentures would raise funds to buy assets but don’t provide immediate use of the asset itself; revenue expenditure is ongoing costs and doesn’t acquire the asset; factoring relates to turning receivables into cash. So leasing is the option that fits the described situation.