Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

A guaranteed purchase option is also known as which of the following?

Rights issue

Call option

Firm commitment

Warrant

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Verified step by step guidance

Understand the concept of a guaranteed purchase option: It refers to a financial arrangement where an entity guarantees the purchase of securities, typically in the context of underwriting or issuing new shares.

Analyze the given options: Rights issue, Call option, Firm commitment, and Warrant. Each term has a specific meaning in financial accounting and securities markets.

Clarify the term 'Firm commitment': In underwriting, a firm commitment means the underwriter guarantees the purchase of all securities being issued, regardless of whether they can sell them to investors. This aligns with the concept of a guaranteed purchase option.

Compare the other options: A Rights issue allows existing shareholders to purchase additional shares at a discount, a Call option gives the holder the right to buy an asset at a specified price, and a Warrant is a derivative that grants the right to purchase securities at a specific price in the future.

Conclude that the correct answer is 'Firm commitment' because it directly matches the definition of a guaranteed purchase option in financial accounting.