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

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Why is a Roth Individual Retirement Account (IRA) considered valuable when saving for college expenses?

Roth IRAs have no contribution limits, allowing unlimited savings for college.

Qualified withdrawals from a Roth IRA, including earnings, can be made tax-free if certain conditions are met.

Withdrawals from a Roth IRA for college expenses are always penalty-free, regardless of age or account status.

Contributions to a Roth IRA are tax-deductible in the year they are made.

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Verified step by step guidance

Understand the concept of a Roth IRA: A Roth IRA is a type of retirement account where contributions are made with after-tax dollars, and qualified withdrawals are tax-free under certain conditions.

Identify the key feature relevant to college savings: Qualified withdrawals from a Roth IRA, including earnings, can be made tax-free if specific conditions are met, such as the account being open for at least five years and the withdrawal being for a qualified expense.

Clarify the misconception about contribution limits: Roth IRAs do have annual contribution limits set by the IRS, which are adjusted periodically. These limits apply regardless of the purpose of the savings, including college expenses.

Explain the penalty-free withdrawal rule: While contributions to a Roth IRA can be withdrawn at any time without penalties, earnings may be subject to penalties and taxes unless the withdrawal meets the criteria for a qualified distribution, such as for college expenses.

Address the tax-deductibility misunderstanding: Contributions to a Roth IRA are not tax-deductible in the year they are made. This is a key distinction from traditional IRAs, where contributions may be tax-deductible.