Christopher Has Set Up an Accounting Business Offering Professional Accounting

question 24

Multiple Choice

Christopher has set up an accounting business offering professional accounting advice.Which of the following type of insurance is he most likely to need?

• A)Public liability insurance
• B)Product liability insurance
• C)Life insurance
• D)Professional indemnity insurance

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Definitions:

Bad Debt Expense

An expense recognized by businesses for accounts receivable that are not expected to be collected.

Credit Basis

The terms and conditions under which credit is extended by a lender to a borrower, including repayment schedules and interest rates.

Operating Expense

Expenses incurred during the normal operation of a business, excluding costs related to production or direct services.

Allowance for Doubtful Accounts

A contra-asset account that estimates the amount of receivables that may not be collectible.