Multiple Choice
Which of the following is an example of a non-bank credit option?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is a primary benefit of maintaining a savings account?
A
It provides direct access to investment in stocks.
B
It is used to record company revenues and expenses.
C
It allows unlimited check writing.
D
It earns interest on deposited funds.
Verified step by step guidance1
Understand the purpose of a savings account: A savings account is a financial tool designed to help individuals store money securely while earning interest on the deposited funds.
Evaluate the options provided in the question: Analyze each statement to determine whether it aligns with the primary function of a savings account.
Option 1: 'It provides direct access to investment in stocks.' Savings accounts do not directly provide access to stock investments; this is typically done through brokerage accounts.
Option 2: 'It is used to record company revenues and expenses.' This describes an accounting function, not the purpose of a savings account.
Option 3: 'It allows unlimited check writing.' Savings accounts generally have restrictions on the number of withdrawals or transfers, unlike checking accounts. The correct answer is: 'It earns interest on deposited funds,' which is the primary benefit of maintaining a savings account.
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