It Is Better to Pool Risks Because

question 33

Multiple Choice

It is better to pool risks because :

• A) you can increase your income.
• B) you can reduce your expected income but increase its standard deviation.
• C) you can reduce the variability of expected income.
• D) you can increase your expected income.

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Definitions:

Adjusting Entry

An entry made in the accounts to reflect a correct amount of revenues and expenses for a specific period before preparing the financial statements.

Consulting Fees-Revenue

Income earned by an individual or a company for providing professional advice or services to clients.

Cash

A form of liquid asset that consists of currency, including coins and banknotes, which can be used immediately for transactions.

Supplies Expense

The cost associated with consumable supplies used during an accounting period in the operation of a business.