Due to the frequency of business changes and the increasingly rapid development of technology, it is necessary for companies to have access to the most efficient sources of financing.As a result, leases have become an increasingly important source of financing over time, because they allow companies to minimally commit funds to acquire assets. When planning about the type of lease (operating or financial), management compares the costs that are reflected in financial statements and financial indicators. Depending on the choice of the type of lease, there are different effects on the company's operations. In the case of a business lease, the company does not become the owner of the property in question, unlike the situation with a financial lease where the company may or may not become the owner of the property in question at the end of the lease.The leasing market in the Republic of Croatia is regulated by the Leasing Act. From an accounting perspective, large entrepreneurs as well as all entities of public interest are required to record leases in accordance with IFRS 16 - Leases, while for medium, small, and micro enterprises, the application of Croatian Accounting Standards for SMEs (CASME) 6 - Property, Plant, and Equipment applies. The leasing business involves two parties: the lessor who provides the asset for use and the lessee who takes the same asset for use and pays a specified fee throughout the duration of the lease agreement. Since leasing has become highly relevant in recent years, the aim of this research is to demonstrate the effects it has on the lessee's financial statements. This thesis elaborates on the features of IFRS 16 and presents its impact on the financial statements of a specific company. The presentation of financial statements is done for both types of leases, and the most important findings and conclusions regarding the more profitable financing source for a business are provided at the end of the thesis.