Which of the Following Statements About the Capital Retention Approach

question 10

Multiple Choice

Which of the following statements about the capital retention approach for determining life insurance needs is (are) true?
I.It assumes that life insurance proceeds will be liquidated to provide income to survivors.
II.It requires the preparation of a personal balance sheet.

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

---

Definitions:

Net Cash

The amount of cash available after accounting for cash inflows and outflows, reflecting the actual liquidity position of an individual or business at a specific point in time.

Operating Activities

Business activities related to daily operations, including sales, supply chain management, and other core functions.

Accounts Receivable

Funds that a business has yet to receive from its customers for the products or services it has already provided.

Direct Method

An approach to allocate service department costs directly to producing departments without reciprocal services considered.