When the Federal Reserve Purchases a U

question 96

Multiple Choice

When the Federal Reserve purchases a U.S. Treasury bond for $1 million by writing a check, when the check returns, the Fed's balance sheet will show:

• A) an increase in assets and a decrease in liabilities of $1 million.
• B) only an increase in assets of $1 million.
• C) only an increase in liabilities of $1million.
• D) an increase in assets and liabilities of $1 million.

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Definitions:

Equivalent Unit

A concept in cost accounting used to apportion costs among finished goods and goods in process, based on work completed.

Process Costing

A costing method used for homogeneous products, allocating costs based on the processes or departments through which the products pass.

Conversion Costs

Costs incurred during the transformation of raw materials into finished goods, including both direct labor costs and manufacturing overhead.

Equivalent Unit

A computation used in process costing that converts partially completed units of production into a number of fully completed units.