The Process of Establishing a Monetary Fund to Cover the Cost

question 48

Multiple Choice

The process of establishing a monetary fund to cover the cost of a loss is called:

• A) risk avoidance.
• B) self-insurance.
• C) risk shifting.
• D) risk reduction.
• E) endorsement.

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Definitions:

Operating Expense

Relates to the costs associated with the day-to-day activities of running a business, excluding direct production costs.

Incoming Merchandise

Refers to items or goods received by a business for sale or use in production.

Estimated Inventory Returns

A financial estimate of the goods a company expects to return to suppliers from the inventory it purchased.

Asset Account

An account that records the valuable resources owned by a business, expected to provide future economic benefits.