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 a key difference between an IRA and a 401(k)?

401(k) accounts have lower annual contribution limits than IRAs.

Only IRAs allow for employer matching contributions.

IRAs are only available to self-employed individuals.

A 401(k) is typically offered by employers, while an IRA is opened individually.

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Verified step by step guidance

Understand the key concepts of an IRA (Individual Retirement Account) and a 401(k) plan. An IRA is a retirement savings account that individuals can open independently, while a 401(k) is typically offered by employers as part of a workplace retirement plan.

Review the contribution limits for both accounts. Generally, 401(k) accounts have higher annual contribution limits compared to IRAs, making the statement about lower limits incorrect.

Examine the employer matching contributions. Only 401(k) plans allow for employer matching contributions, which is a benefit provided by employers to encourage saving. IRAs do not include this feature.

Clarify the eligibility criteria for IRAs. IRAs are not limited to self-employed individuals; they are available to anyone with earned income, making the statement about self-employment incorrect.

Conclude that the key difference is that a 401(k) is typically offered by employers, while an IRA is opened individually. This aligns with the correct answer provided in the problem.