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Cpcu 540 Questions And Answers With Verified Solutions 100% Correct!!!
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Cpcu 540 Questions And Answers With Verified Solutions 100% Correct!!!
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Cpcu 540 Questions And Answers WithVerified Solutions 100% Correct!!!
Capital budgeting - ANSWER✔✔ The planning and managing of a corporation's
long-term investments
Capital structure - ANSWER✔✔ A corporation's mix of long-term debt and equity
Fair value - ANSWER✔✔ The market value, either actual or estimated, of an asset
or a liability
Sarbanes-Oxley Act of 2002 - ANSWER✔✔ A federal statutory law governing
corporate directors in the areas of investor protection, internal controls, and
penalties, both civil and criminal.
Stakeholder - ANSWER✔✔ Anyone with a financial interest in the corporation
Statutory accounting principles (SAP) - ANSWER✔✔ The accounting principles and
practices that are prescribed or permitted by an insurer's domiciliary state and
that insurers must follow
Working capital - ANSWER✔✔ A liquidity measure that is calculated by
subtracting current liabilities from current assets. It is used to determine a
company's ability to finance immediate operations (to buy inventory, finance
growth, and obtain credit)
,Accounting - ANSWER✔✔ The classification, analysis, and determination of the
appropriate method of reporting the effects of the bookkeeping records in an
organization's financial statements
Additional Paid-In-Capital (equation) - ANSWER✔✔ (#shares x price per share) -
(#shares x par value)
Assets Unique to Insurers - ANSWER✔✔ Premium Receivables
Reinsurance recoverables
Deferred policy acquisition costs
Balance sheet - ANSWER✔✔ The financial statement that reports the assets,
liabilities, and owners' equity of an organization as of a specific date
Balance Sheet Equation - ANSWER✔✔ Assets - liabilities = shareholder's equity
(net worth)
Comprehensive income - ANSWER✔✔ A measure of income that goes beyond
that reported on the income statement by including items such as unrealized
gains and losses
Cost of Goods Sold - ANSWER✔✔ Beginning inventory + additions to inventory -
ending inventory
Current assets - ANSWER✔✔ A balance sheet asset classification that includes
case and other assets that are expected to be converted into cash, sold, or
exchanged within the buisness's normal operating cycle, usually one year
,Current liabilities - ANSWER✔✔ A balance sheet liability classification that
includes obligations whose payments are reasonably expected to require the use
of cash or the creation of other current liabilities within one year
Depreciation expense - ANSWER✔✔ An accounting method that spreads out the
expense of a purchase over the life expectancy of the item
Financial statement - ANSWER✔✔ A document that quantitatively presents an
organization's financial activities or status
Form 8-K Required When... - ANSWER✔✔ - Material definitive agreements
entered
- Release of non-public information
- Creation of a direct financial obligation
- Change of independent auditor
- Departure or election of directors/principal officers
Generally accepted accounting principles (GAAP) - ANSWER✔✔ The rules and
procedures to be used in the preparation of an organization's financial statements
Gross Margin (equation) - ANSWER✔✔ Gross profit / sales
Gross margin (gross profit margin) - ANSWER✔✔ The percentage of sales
remaining after deducting the cost of goods sold from sales, calculated by dividing
gross profit by sales
, Gross profit - ANSWER✔✔ An income statement value that represents sales or
operating revenue minus the cost of goods sold
Gross Profit (equation) - ANSWER✔✔ Sales (operating revenues) - cost of goods
sold
Inventory - ANSWER✔✔ An asset classification that consists of goods available for
sale to customers; for a manufacturing company, also includes raw materials and
finished goods
Liabilities Unique to Insurers - ANSWER✔✔ Unpaid losses and loss adjustment
expenses
Unearned premium
Major components of shareholder equity - ANSWER✔✔ Paid-in capital
Retained earnings
Accumulated other comprehensive income
Treasury stock
Marketable Securities - ANSWER✔✔ An asset classification that includes
temporary investments that can easily be converted into cash
Mark-up - ANSWER✔✔ Gross profit expressed as a percentage of the cost of
goods sold
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