Which of the Following Statements Describes How a Traditional 401(k)

question 27

Multiple Choice

Which of the following statements describes how a traditional 401(k) account is similar to a Roth 401(k) account?

• A) Both accounts can receive matching contributions from employers.
• B) Distributions from a traditional 401(k) account and a Roth 401(k) account are both subject to minimum distribution penalties.
• C) Employers generally choose how funds in these accounts will be invested.
• D) Employees contribute before-tax dollars to both types of accounts.

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Definitions:

Allowance for Doubtful Accounts

Allowance for doubtful accounts is an accounting provision that estimates the amount of receivables that may not be collectible due to customer defaults.

Contra-Revenue

An account on a company's income statement that deducts from gross revenue to arrive at net revenue, including returns, allowances, and discounts.

Bad Debts Expense

This represents the cost associated with accounts receivable that a company deems uncollectible and writes off as a loss.

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including material and labor costs.