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

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is an advantage of certificates of deposit (CDs) over savings accounts?

CDs provide check-writing privileges.

CDs typically offer higher interest rates than savings accounts.

CDs have no minimum deposit requirements.

CDs allow unlimited withdrawals without penalty.

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Verified step by step guidance

Understand the concept of Certificates of Deposit (CDs): CDs are time deposits offered by banks and financial institutions where you agree to leave your money for a fixed term in exchange for a higher interest rate compared to regular savings accounts.

Compare the features of CDs and savings accounts: Savings accounts typically offer lower interest rates but provide flexibility such as check-writing privileges and unlimited withdrawals. CDs, on the other hand, often have higher interest rates but come with restrictions like penalties for early withdrawal.

Evaluate the options provided in the question: Analyze each statement to determine which accurately reflects an advantage of CDs over savings accounts. For example, CDs do not provide check-writing privileges, and they often have minimum deposit requirements.

Focus on the correct answer: CDs typically offer higher interest rates than savings accounts. This is a key advantage of CDs, as they reward customers for committing their funds for a specified period.

Conclude by reinforcing the importance of understanding the trade-offs: While CDs offer higher interest rates, they lack the flexibility of savings accounts. This makes them suitable for individuals who can afford to lock their funds for a fixed term without needing immediate access.