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

When Rick recently died and left behind an individual IRA account in his name, which of the following statements best describes what typically happens to the IRA account?

The IRA account is automatically converted into a joint account with Rick's closest living relative.

The IRA account is closed and all funds are forfeited to the IRS.

The IRA account is transferred to the designated beneficiary, who may have options for distribution based on their relationship to Rick.

The IRA account is immediately liquidated and the proceeds are paid to the state.

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Verified step by step guidance

Step 1: Understand the concept of an Individual Retirement Account (IRA). An IRA is a type of retirement savings account that allows individuals to save and invest for retirement with tax advantages.

Step 2: Learn about the process when the account holder of an IRA passes away. Typically, the IRA account does not get converted into a joint account or forfeited to the IRS. Instead, it is transferred to the designated beneficiary.

Step 3: Review the role of the designated beneficiary. The beneficiary is the person or entity named by the account holder to inherit the IRA. This designation is made during the account holder's lifetime.

Step 4: Understand the options available to the beneficiary. Depending on their relationship to the deceased (e.g., spouse or non-spouse), the beneficiary may have different options for distribution, such as rolling over the account, taking distributions, or liquidating the account.

Step 5: Clarify misconceptions. The IRA account is not automatically converted into a joint account, forfeited to the IRS, or liquidated with proceeds paid to the state. Instead, it is transferred to the designated beneficiary, who then decides how to manage the funds.