Lawrence Is Self-Employed and Wants to Establish the Simplest Type

question 79

Multiple Choice

Lawrence is self-employed and wants to establish the simplest type of retirement plan. He should set up a

• A) 401(k) plan.
• B) Regular IRA.
• C) Roth IRA.
• D) SEP plan.
• E) Spousal IRA.

---

Definitions:

Return on Assets

Return on assets (ROA) is a profitability ratio that measures how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.

Average Total Assets

A measure calculated by taking the sum of total assets at the beginning and end of a period and dividing by two, used to evaluate a company's asset utilization efficiency.

Average Total Liabilities

The average amount of money that a company owes to others over a specific time period, used to assess the company's financial health.

Depreciation Expense

An accounting method that allocates the cost of a tangible or physical asset over its useful life.