Under One Method of Estimating a Loss Reserve, the Reserve

question 8

Multiple Choice

Under one method of estimating a loss reserve, the reserve is based on life expectancy, duration of disability, and similar factors. This method of estimating loss reserves is called the

• A) judgment method.
• B) tabular value method.
• C) loss ratio method.
• D) average value method.

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Definitions:

Activity-Based Costing

An accounting method that assigns costs to products and services based on the resources they consume and the activities they require.

Overhead Costs

Indirect costs of products or services.

Capacity-Sustaining Cost

Costs incurred to maintain the production capacity of a company at current levels, including costs for maintenance and repair of equipment.