Which of the Following Types of Loss Exposures May Be

question 28

Multiple Choice

Which of the following types of loss exposures may be appropriately handled through the purchase of insurance?
I.High-frequency,low-severity loss exposures
II.Low-frequency,high-severity loss exposures

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

January 1 Retained Earnings

The amount of net income left over for a company from the previous fiscal year, reported at the start of the new year on January 1.

Downstream Transfer

A transaction or movement of goods, services, or funds from a parent company to a subsidiary or from a higher level to a lower level within an organizational structure.

Upstream Transfer

A transfer of assets or resources from a subsidiary to its parent company, often examined for tax and financial reporting implications.

Worksheet Entry

An adjustment recorded on a worksheet, which is not yet posted to formal accounting records, often used in the process of preparing financial statements.