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

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Over time, the average rate of return on stocks is typically:

Higher than the average rate of return on bonds

Lower than the average rate of return on savings accounts

Equal to the average rate of return on Treasury bills

Zero, due to market fluctuations

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Verified step by step guidance

Understand the concept of 'average rate of return': This refers to the average annual profit or loss generated by an investment over a period of time, expressed as a percentage of the initial investment.

Compare the risk and return characteristics of different investment types: Stocks generally have higher risk compared to bonds, savings accounts, and Treasury bills, but they also tend to offer higher returns over the long term to compensate for the increased risk.

Analyze historical data: Historically, stocks have provided higher average rates of return compared to bonds, savings accounts, and Treasury bills. This is due to their potential for capital appreciation and dividend payments.

Consider market fluctuations: While stocks are subject to market volatility, their long-term average rate of return is typically positive and higher than other investment types mentioned in the problem.

Conclude based on financial principles: The correct answer is 'Higher than the average rate of return on bonds,' as stocks generally outperform bonds and other safer investments over time in terms of average rate of return.