Which of the Following Is an Example of the Precautionary

question 12

Multiple Choice

Which of the following is an example of the precautionary motive for saving?

• A) Pat puts $400 per month in his 401(k) retirement account.
• B) Jordan sets aside $200 per month in case she has to pay for a new roof for her house.
• C) Gerry and Terry put $2,000,000 in a trust fund that will go to their children when they die.
• D) Every month, Chris puts $400 into his saving account so that he can buy a new car in a few years.

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Definitions:

Single-Entry Bookkeeping System

An accounting method in which each financial transaction is recorded only once in account books; similar to a checkbook register; the journal for each transaction is recorded in one column, or on a single line, to account for either a positive or negative amount to demonstrate the receipt or disbursement of cash.

Checkbook Register

A record of all deposits, withdrawals, checks, and transactions made through a checking account.

Cash Control Sheet

A financial document used to track the inflow and outflow of cash within a business to ensure accurate accounting and prevent fraud.

Pegboard System

An organizational tool consisting of a board with holes that can hold pegs or hooks for the purpose of hanging or displaying items.