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

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

If an options contract is exercised, which of the following statements is true?

The option premium is refunded to the holder.

No transaction occurs and both parties are released from their obligations.

The holder of the option must buy or sell the underlying asset as specified in the contract.

The option contract is automatically renewed for another term.

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Verified step by step guidance

Understand the concept of an options contract: An options contract gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price (strike price) before or at a certain expiration date.

Clarify the role of the option holder: If the holder exercises the option, they are choosing to act on the right provided by the contract. This means they must buy (in the case of a call option) or sell (in the case of a put option) the underlying asset as specified in the contract.

Evaluate the statement about the option premium: The option premium is the cost paid by the holder to acquire the option. This premium is not refunded upon exercising the option; it is the cost of having the right to exercise the option.

Analyze the statement about transaction occurrence: If the option is exercised, a transaction does occur. The holder and the writer of the option fulfill their obligations as specified in the contract. Both parties are not released from their obligations until the transaction is completed.

Review the statement about contract renewal: Options contracts are not automatically renewed for another term. Once the expiration date passes or the option is exercised, the contract ends.