Of the investment methods listed below, which is the best option for storing your emergency fund? A. 401K B. IRA C. Interest-bearing checking or savings account
Correct Answer: C Your emergency fund should be liquid. This means you should keep it in a place you can access quickly and easily. If you reach into your retirement account before retirement age, there are hefty penalties and taxes.
Which of these represents a Bond? A. Investment that fluctuates based on the stock market B. Debt obligation, a form of borrowing C. Long-term asset not bought or sold in the normal course of business
Correct Answer: B A bond is a debt investment in which an investor loans money to an entity. The entity borrows funds for a defined period of time. Owners of the bonds are debt-holders, or creditors, of the issuer. Bonds are a form of IOUs.
When are revenue and expenses reported on the income statement under cash basis of accounting?
Revenue is reported on the income statement when cash is received from customers. Expenses are reported when the cash is paid out. For example, I own a bike shop in Texas. I received $300 cash in exchange for selling a bike in September. On my income statement, for the month of September, I would report the $300 bike sale. In October, I paid $200 cash for my shop to be repainted. On my October income statement, the $200 expense for painting will be reported.