The Portion of Net Income That Is Held by a Firm

question 48

Multiple Choice

The portion of net income that is held by a firm for future growth comprises which one of the following balance sheet accounts?

• A)capital surplus
• B)common stock
• C)internal earnings
• D)retained earnings
• E)net earnings

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Definitions:

Community Rating

An insurance pricing strategy which sets premiums based on the collective risk profile of a community or geographic area rather than individual risk factors, often used in healthcare insurance.

Adverse Selection

A situation in which asymmetric information leads to a selection of undesirable outcomes, such as in insurance markets.

Moral Hazard

The situation where one party is more likely to take risks because the consequences of those risks will be felt by another party.

Uninsured

Individuals or entities lacking insurance coverage, exposing them to potential financial loss from unforeseen events or health issues.