If Insurance Did Not Exist in the United States, Which

question 52

Multiple Choice

If insurance did not exist in the United States, which of the following might reasonably be expected to happen?

• A) Banks would lower their interest rates on car loans.
• B) Moral hazards would increase.
• C) The occurrence of perils would decrease.
• D) In general, only small businesses would be able to survive.

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Definitions:

FASB

An abbreviation for Financial Accounting Standards Board, the organization responsible for establishing accounting and financial reporting standards in the United States.

Qualitative Characteristics

The attributes that make the information provided in financial statements useful to users.

Quarterly Financial Statements

Financial reports that are released by companies every three months to provide investors and analysts insights into their performance and financial health.

Materiality Constraint

A principle that allows accountants to disregard minor errors or omissions in financial statements when such misstatements are not expected to influence the decision of a reasonable user.