Final answer:
An operating lease typically refers to a short-term and cancellable agreement that doesn't transfer ownership or include a bargain purchase at the end of the term. It is often used by businesses seeking flexibility.
Step-by-step explanation:
An operating lease is typically characterized by being short-term in nature and often includes provisions that allow the lessee to cancel the lease. It does not generally lead to the transfer of ownership of the leased asset at the end of the lease term, nor does it usually contain a bargain purchase option. When a business enters into an operating lease, it is for a period that is less than the substantial life of the asset, often less than 75%. Moreover, the lease agreement might stipulate terms for termination, such as the requirement for a 30-day written notice, as well as the liabilities for the lessee in the event of overholding or vacating the premises.