If Losses on a Particular Line of Medical Malpractice Insurance

question 43

Multiple Choice

If losses on a particular line of medical malpractice insurance were $650 million and premiums earned were $575 million, the loss ratio would be

• A)1.13 implying that this line of insurance is profitable.
• B)1.13 implying that this line of insurance is unprofitable.
• C)0.88 implying that this line of insurance is profitable.
• D)0.88 implying that this line of insurance is unprofitable.
• E)-$75 million implying that this line of insurance is unprofitablE.

Analyze the effects of buying decisions on inventory levels and variance analysis.

Assess the impact of variances on performance evaluation systems.

Understand the treatment of year-end balances in variance accounts.

Recognize the role of engineers and other professionals in setting standard costs.

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Definitions:

Unearned Service Revenue

Liabilities arising when a business receives payment for services that have not yet been performed, recognized as revenue over time as services are provided.

Accounts Receivable

Customer debts to a company for the provision of services or delivery of goods not yet paid for.

Accounting Cycle

A series of steps taken in order to prepare financial statements, starting from transactions and ending with closing the books.

Post-closing Trial Balance

A financial statement that lists all accounts and their balances after closing entries have been made, usually the final step in the accounting cycle.