Multiple Choice
J is 35 years old and looking to purchase a small business. To evaluate the company's past financial performance and current financial position, which type of accounting information would be most useful to J?
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1. Introduction to Accounting
Types of Accounting
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Fixed annuities provide each of the following except:
A
Variable returns based on market performance
B
Protection against investment losses
C
A guaranteed stream of income
D
Tax-deferred growth on earnings
Verified step by step guidance1
Understand the concept of fixed annuities: Fixed annuities are financial products offered by insurance companies that provide a guaranteed stream of income, typically for retirement purposes.
Identify the key features of fixed annuities: Fixed annuities offer protection against investment losses, a guaranteed stream of income, and tax-deferred growth on earnings. These features are designed to provide financial security and stability.
Analyze the exception in the question: Fixed annuities do not provide variable returns based on market performance. This is a characteristic of variable annuities, not fixed annuities.
Compare fixed annuities to variable annuities: Variable annuities involve investment in market-based options, which can lead to fluctuating returns based on market performance. Fixed annuities, on the other hand, offer predictable and stable returns.
Conclude the reasoning: The correct answer is 'Variable returns based on market performance,' as this feature is not associated with fixed annuities.
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