Which of the Following Is a Motive for Using Insurance

question 44

Multiple Choice

Which of the following is a motive for using insurance to manage risk?

• A) Premiums, no matter how high, are consistent and easy to budget.
• B) The firm intends to make money from the insurance company if a specified loss happens.
• C) The firm does not want to be concerned with small, inconsequential losses and chooses to have the insurance company handle them.
• D) Insurance can provide protection against events that can cause financial distress.

---

Definitions:

Multiple-Step Income Statement

An income statement format that separates operating activities from non-operating activities, distinguishing between sales and expenses directly related to the business's primary operations and other sources or uses of income.

Chart of Accounts

A systematic list of all account titles and numbers being used by an organization to track financial transactions and prepare financial statements.

Interest Expense

The cost incurred by an entity for borrowed funds, considered as a non-operating expense on the income statement.

Perpetual Inventory System

An accounting method that continuously updates inventory records for each addition or subtraction, reflecting current inventory levels in real-time.