Multiple Choice
If you make a late credit payment, you might see the lender add which of the following to your account?
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7. Receivables and Investments
Types of Receivables
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The amount of money the insurance company agrees to pay for an incident is called ___________.
A
bad debt expense
B
accounts receivable
C
the insurance proceeds
D
notes receivable
Verified step by step guidance1
Step 1: Understand the context of the question. The problem is asking for the term that describes the amount of money an insurance company agrees to pay for an incident.
Step 2: Review the provided options: 'bad debt expense,' 'accounts receivable,' 'the insurance proceeds,' and 'notes receivable.'
Step 3: Clarify the meaning of each term: 'Bad debt expense' refers to the cost associated with uncollectible accounts receivable. 'Accounts receivable' represents money owed to a company by its customers. 'Notes receivable' refers to written promises for amounts to be received in the future. 'The insurance proceeds' refers to the amount paid by an insurance company for a claim.
Step 4: Match the definition of 'the insurance proceeds' to the question. It aligns with the description of the money an insurance company agrees to pay for an incident.
Step 5: Conclude that the correct term for the amount of money the insurance company agrees to pay for an incident is 'the insurance proceeds.'
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