Reserving Liabilities Involves the Calculation of the Amount That the Insurer

question 28

Multiple Choice

Reserving liabilities involves the calculation of the amount that the insurer needs to set aside to pay future claims.It's equivalent to the _____ of a nonfinancial firm.

• A)equity
• B)assets
• C)reserves
• D)debt
• E)market value

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Definitions:

Monitoring

The continuous observation, checking, and adjustment of a process or performance by systematically tracking key metrics or activities.

Reasonable Assurance

A high level of certainty provided through internal controls and procedures to prevent and detect errors or fraud in financial reporting.

Vulnerabilities

Weaknesses or flaws in a system that can be exploited to compromise its security or functionality.

Outstanding Checks

Outstanding checks refer to checks that have been written and recorded in the paying account but have not yet been cashed or cleared by the bank.