Which of the Following Refers to the Potential for Loss

question 62

Multiple Choice

Which of the following refers to the potential for loss in an insurance agreement?

• A) Risk
• B) Loss
• C) Premium
• D) Distribution
• E) Outlay

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Definitions:

Favorable Variance

The difference between actual results and expected (budgeted) results that indicates more efficient or cost-effective performance.

Actual Cost

The actual expenses incurred in acquiring an asset or delivering a service, including all relevant expenditures without estimation.

Budgeted Cost

The estimated or planned amount of money allocated for a particular purpose or period of time.

Direct Materials Cost Variance

A measure that evaluates the difference between the actual costs of direct materials used in production and the standard costs.