The Buying Back of a Financial Liability or Equity Instrument

question 21

Multiple Choice

The buying back of a financial liability or equity instrument is referred to as:

• A)call
• B)allotment
• C)application
• D)redemption

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Definitions:

Income Summary

The income summary account is used in the closing process of accounting to summarize revenue and expenses for a specific period, helping determine the net income or loss.

Permanent Account

An account that is not closed at the end of the accounting period and whose balances are carried forward to the next period, such as assets, liabilities, and equity accounts.

Plant Assets

Long-term tangible assets that are used in the operation of a business and are subject to depreciation, excluding land.

Unclassified Balance Sheet

A simplified financial statement that presents assets, liabilities, and equity without categorizing them into further subdivisions.