A company decides to lease office equipment with monthly payments rather than purchasing it outright. How should these leasing costs be classified?
Capital expenses
Operational expenses
Opportunity costs
Depreciation expenses
Leasing costs with monthly payments are considered operational expenses because they represent ongoing, recurring costs associated with the day-to-day operations of the business. If the company had purchased the equipment outright, the cost would have been a capital expense, which involves a significant one-time investment in a long-term asset.
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