When the Fed Buys a Treasury Bill from the Public

question 204

Multiple Choice

When the Fed buys a Treasury bill from the public, how does it usually pay for the T-bill?

• A)By writing a check on a commercial bank account
• B)By printing new Federal Reserve notes
• C)By creating new reserves in bank accounts
• D)By prepaying taxes into the Treasury's account

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Definitions:

Income Summary

An account in the ledger that aggregates all income and expense accounts to determine the net profit or loss for a certain period.

Revenue Accounts

Accounts that track the income generated from a company's primary operations and activities.

Expense Accounts

Financial accounts used to track money spent or costs incurred by a business in its operational activities.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent ones, thereby preparing the books for the next period.