Which of the Following Statements Is True About a Business

question 37

Multiple Choice

Which of the following statements is true about a business income coverage form?

• A)This policy protects the insured against business interruption losses, but not against extra expense losses.
• B)This policy covers all lost revenues because those revenues generally cover expenses.
• C)The policy's intention is to maintain the insured's same financial position with or without a loss.
• D)Under this policy, businesses that sustained losses because of the economic backlash and fear after September 11, 2001, were covered for their loss of income.
• E)Extra expenses incurred by businesses following property damage are not covered by this policy.

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Definitions:

Equivalent Units

A term used in cost accounting to represent a quantity of production expressed in terms of fully completed units, used in calculating the cost per unit during a period.

First Processing Department

The initial stage or department in a manufacturing or production process where raw materials begin their transformation into finished products.

FIFO Method

The First-In, First-Out method, an inventory valuation strategy where the first items placed in inventory are the first sold.

Conversion Cost

The combined cost of direct labor and overhead expenses incurred to convert raw materials into finished goods.