When a Guarantee Exists That a Company Is Entitled to a Return

question 38

True/False

When a guarantee exists that a company is entitled to a return equal to the amount of the cash surrender value of the policy, a portion of the premium is recorded to a long term liability account.

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Definitions:

Admitted

An insurance term referring to insurers who are licensed and authorized to do business in a particular state or country.

Partnership

A business organization where two or more individuals manage and operate the business in accordance with the terms and objectives set out in the Partnership Deed.

Contributing Assets

Assets given by owners or shareholders as part of their investment in the company.

Capital Balances

The amount of money invested in a company by its owners or shareholders.