Deferred Policy Acquisition Costs Represent the Cost of Obtaining Policies

question 17

True/False

Deferred policy acquisition costs represent the cost of obtaining policies.Under statutory accounting practices,these costs are charged to expense as they are incurred.

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Definitions:

Bad Debt Expense

An estimated expense that represents the amount of receivables that a company does not expect to collect due to customers' inability to pay.

Credit Balance

This occurs when the total credits in an account exceed the total debits, often indicating money owed to a customer or client.

Adjusting Entry

An amended bookkeeping entry made to rectify or allocate transactions to the appropriate accounting period or ensure that revenues and expenses are recorded in the period they occur.

Doubtful Accounts

Accounts receivable that a company believes might not be collected due to credit risk.