All of the Following Are Disadvantages of Using Insurance in a Commercial

question 35

Multiple Choice

All of the following are disadvantages of using insurance in a commercial risk management program EXCEPT

• A)There is an opportunity cost because premiums must be paid in advance.
• B)Considerable time and effort must be spent selecting and negotiating coverages.
• C)It results in considerable fluctuations in earnings after losses occur.
• D)Attitudes toward loss control may become lax when losses are insured.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life.

Accounts Payable

Liabilities of a business that are due to creditors within a short period, typically less than a year.

Net Cash

The amount of cash available after all cash inflows and outflows have been accounted for, often within a specific reporting period.

Sale Of Equipment

The act of selling off machinery, tools, or devices used in production or office operations, often recorded as a cash inflow in financial accounts.