Kevin Was Involved in an Auto Accident in Which He

question 37

Multiple Choice

Kevin was involved in an auto accident in which he was at fault. His own car sustained $3,696 damages and the other vehicle cost $2,083 to repair. Kevin was not injured, but the driver of the other car required medical treatment costing $32,103. There was additional property damage in the amount of $413. Kevin's policy includes 25/50/25 liability, $250 deductible collision, and full coverage comprehensive. How much of the damages must the insurance company pay?

• A) $3,696.00
• B) $3,446.00
• C) $25,000.00
• D) $30,942.00

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Definitions:

Prepaid Expenses

Payments made in advance for goods or services to be received in the future, recorded as assets on the balance sheet until they are consumed or used.

Indirect Method

A method of presenting the operating activities section of the statement of cash flows that adjusts net income to compute cash flows from operating activities.

Net Income

The net income of a company, which is the remaining amount of total revenue after deducting all expenses and taxes.

Inventory

The total amount of goods and materials held by a company intended for sale or production.