Arthur Is Driving Home from Work When He Runs Off

question 5

Multiple Choice

Arthur is driving home from work when he runs off the road and hits a telephone pole. These are the losses he suffers: $12,000 to repair the damage to his car, and, $800 to rent a car while his car is being repaired. What is the correct name for each of these losses?

• A) The $12,000 is an indirect loss, and the $800 is a direct loss.
• B) The $12,000 is a direct loss, and the $800 is also a direct loss.
• C) The $12,000 is a direct loss, and the $800 is an indirect loss.
• D) The total loss of $12,800 is a direct loss.

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Definitions:

Exchange Rates

The price at which one currency can be converted into another currency, influencing international trade and investments.

Balance Sheet

A financial statement that displays a company’s financial position at a certain date, listing assets, liabilities, and shareholder equity.

Exchange Rates

The price of one nation's currency expressed in the currency of another nation, used to convert from one currency to another for trade and finance.

Cash

This term refers to money in the form of currency that is used to conduct transactions, make purchases, or settle debts.