Answer:
A) a finance lease will cause debt to increase, compared to an operating lease
Explanation:
In a financial lease, the lessee assumes the ownership of the leased asset, and must depreciate it in the same way it would depreciate other similar assets held. While the lessee depreciates the leased asset, the lessor must amortize it. That is why the lessee must record the value of the financial lease as a liability.
On the other hand, an operating lease doesn't transfer ownership, so the lessee only has to record the lease as an expense in the income statement.
