On January 1,2018,the Prepaid Insurance Account of Dogwood Company Had

question 173

True/False

On January 1,2018,the Prepaid Insurance account of Dogwood Company had a beginning balance of $1,500.Three months of insurance premiums remain in this beginning balance.On February 21,2018,the company paid an annual insurance premium in the amount of $3,400 for the period beginning March 1.On February 28,2018,the balance in Prepaid Insurance is $1,000.

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Definitions:

Adverse Selection

Adverse selection is a situation in financial markets where there is asymmetric information leading buyers or sellers to make decisions that can result in the market becoming skewed or unbalanced, often seen in insurance markets.

Insurance

A contract represented by a policy, where an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Risk Averse

A description of an individual's or entity's preference to avoid risk, often by choosing options with certain outcomes over those with higher degrees of uncertainty.

Insurance

A form of risk management primarily used to hedge against the risk of a contingent or uncertain loss.