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CPCU 540 Questions And Answers
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CPCU 540 Questions And Answers Capital budgeting The planning and managing of a corporation's long-term investments Capital structure A corporation's mix of long-term debt and equity Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:09 / 0:15 Full scr...

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  • October 23, 2024
  • 22
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • cpcu 540 questions and answers
  • capital budgeting the planning and managing of a c
  • capital structure a corporations mix of long term

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  • CPCU - Chartered Property Casualty Underwriter
  • CPCU - Chartered Property Casualty Underwriter

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CPCU 540 Questions and Answers
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

Net Income (equation) - answer Revenue - Expenses (including depreciation) +
Gains - Losses - Taxes

Notes to financial statements include - answer - A brief description of the company's
operations
- Significant accounting policies and changes
- Detailed listing of long-term debt
- Loss contingencies and other commitments
- Financial information by business segment
- Any other explanations management deems necessary

Operating income - answer An income statement value that reflects income that
results from the normal operations of the business during the period covered by the
statement; calculated as the goss profit less selling, general, and administrative
expenses

Operating Income (equation) - answer Gross Profit - General Operating Expenses

Other Comprehensive Income - answer Change in unrealized value of investments
Foreign currency translations gains or losses
Changes in minimum pension liability

Paid-in capital - answer The total amount invested in an organization by the owners
(i.e. The amount raised through the sale of stock)

Paid-In-Capital (equation) - answer Par value + paid in capital over the par value

Prepaid Expenses - answer An asset classification that represents the amount that
has already been paid for services that have not been received or used

Receivables - answer An asset classification that consists of the amounts owed to a
company by customers and other outsiders

Retained earnings - answer The cumulative net income that an organization has
retained, after payment of dividends, for reinvestment in the organization's operations

Revenue - answer The inflow of assets, usually cash or accounts receivable,
resulting from the sale of products or the rendering of services to customers

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