Which of the Following Statements Is Correct with Respect to Bonding

question 49

Multiple Choice

Which of the following statements is correct with respect to bonding?

• A) Bonding is another term for insurance. The two terms, bonding and insurance, are interchangeable.
• B) If a person is bonded and that person commits some wrongful act such as stealing a client's money, the bonding company is bound to compensate him for any losses he suffers from being caught.
• C) Bonding provides protection to the victim injured by the wrongful conduct of the person bonded.
• D) Bonding provides protection against losses incurred because of fluctuations in the financial markets.
• E) Bonding is a government certification system whereby the government guarantees that a person so bonded or certified will do the job he is hired to do as set out in the bonding certificate.

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Definitions:

Credit Policy

The guidelines a company follows to determine credit terms for customers, including payment period, interest rates, and the criteria for extending credit.

Delayed Credit

A bookkeeping entry signifying credits that will be applied to a customer's account at a future date, affecting future billing cycles rather than immediate revenues.

Delayed Charge

A transaction that records an expenditure which will be billed to a client or customer at a future date, not immediately impacting cash flow.

Pending Expense

Expenditures that have been incurred but not yet fully processed or paid out.