3-91 Which of the Following Arises in Policies in Which

question 89

Multiple Choice

3-91 Which of the following arises in policies in which the insured event occurs during a coverage period but a claim is not filed or reported until many years later?

• A)Short-tail losses.
• B)Adverse selection.
• C)Moral hazard.
• D)Long-tail losses.
• E)Social inflation.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis rather than continuously.

Condensed Income Statements

Simplified financial statements that present a summary of a company's revenue, expenses, and profitability over a particular period.

Merchandising Companies

Companies that purchase goods in a finished condition and resell them at a profit without further processing.

Operating Cycles

Operating cycles refer to the average period of time it takes for a business to convert its inventory to sales revenue and then to cash.