Multiple Choice
Which of the following best describes the primary difference between brokers and agents versus merchant wholesalers in accounting?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Dawn has a retirement account. Which of the following best describes this account?
A
It is a type of managerial account used to track business expenses.
B
It is a liability account that records amounts owed to suppliers.
C
It is a revenue account that tracks income from investments.
D
It is a personal account used to accumulate savings for retirement, often with tax advantages.
Verified step by step guidance1
Understand the nature of a retirement account: A retirement account is a personal account designed to help individuals save money for their retirement years. It often comes with tax advantages to encourage long-term savings.
Clarify the purpose of the account: Unlike managerial accounts, which are used for tracking business expenses, a retirement account is not related to business operations but is focused on personal financial planning.
Differentiate from liability accounts: Liability accounts record amounts owed to others, such as suppliers or creditors. A retirement account does not represent a debt but rather accumulated savings.
Distinguish from revenue accounts: Revenue accounts track income generated from business operations or investments. A retirement account is not primarily for tracking income but for accumulating savings over time.
Conclude with the correct description: A retirement account is a personal account used to accumulate savings for retirement, often with tax advantages, making it distinct from managerial, liability, or revenue accounts.
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