Precautionary Savings Is

question 14

Multiple Choice

Precautionary savings is

• A)forced savings, which occurs when the government implicitly saves for people through the Social Security system.
• B)additional savings people make in order to profit from the high returns to the stock market.
• C)savings made by the poor.
• D)the extra amount of savings a household maintains because of uncertainty about its future income.

Classify accounts into their correct categories.

Distinguish between accounts that have a normal debit or credit balance.

Accurately record transactions in T accounts.

Understand the components of a chart of accounts.

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Definitions:

Collection

The process of pursuing payments of debts owed by customers.

Net Loss

Occurs when total expenses exceed total revenues during a specific period of time, indicating negative profitability.

Liabilities

Financial obligations or debts owed by a company to others, which must be settled over time by transferring economic benefits.

Expenses

The costs incurred in the process of generating revenue, such as rent, utilities, and salaries.