Finance Lease Accounting is the area of accounting that deals with financial leasing agreements. These agreements involve one party, known as the lessee, taking out a loan or agreement to lease a property from another party, known as the lessor, for an agreed-upon length of time. During this time, the lessee is responsible for making regular payments towards the loan, which include both the principal amount borrowed and interest charges. The finance lease agreement allows the lessee to pay off the total balance at any point in time during the repayment period. At the end of the term, the lessee typically has the option to purchase the item outright or renew the lease on the same terms.