Lease Accounting is the process of recording and managing the financial aspects of leases in a company's financial statements. It involves recognizing the rights and obligations that come with leasing assets, such as equipment or property, and ensuring that these are accurately reflected in the balance sheet. Under the new accounting standards, companies must classify leases as either operating leases or finance leases. This classification affects how lease payments are recorded and reported, impacting key financial metrics like assets, liabilities, and expenses. Proper lease accounting helps provide a clearer picture of a company's financial health.