Donna,who Is Single and 30-Years-Old,has Received Several Speeding Tickets Recently

question 141

Multiple Choice

Donna,who is single and 30-years-old,has received several speeding tickets recently and was shocked by the effect on her auto insurance.Donna drives a 2002 Pontiac Firebird,is currently not covered by health insurance,has an emergency fund of $25,000,an income of $100,000 per year,and an investment portfolio of $230,000.She is trying to reduce the price of her auto insurance.Which of the following actions is most likely to be advisable.

• A) lower her liability limits to the minimum allowed in her state
• B) drop her medical payments coverage
• C) raise her deductible from $250 to $1,000
• D) drop her comprehensive coverage and keep collision-only
• E) drop everything from her policy except the liability insurance

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Definitions:

Overstate Assets

Reporting a company's assets at a value higher than their actual worth, which can inaccurately represent financial health.

Unearned Revenue Account

An account representing cash received for goods or services not yet provided; considered a liability until the service or product is delivered.

Cash Receipt

The collection of money (paper money, coins, checks) received by a business for the sale of goods or services or any other financial transaction.

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.