Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is always considered a cost when purchasing insurance?

Potential future claim payments

Dividends received from the insurance company

Interest earned on invested funds

The insurance premium paid to the insurer

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Verified step by step guidance

Understand the concept of 'cost' in financial accounting: A cost is an expenditure or payment made to acquire goods or services. In the context of insurance, the cost is the amount paid to the insurer for coverage, known as the insurance premium.

Analyze the options provided: Potential future claim payments, dividends received from the insurance company, and interest earned on invested funds are not direct costs incurred by the insured party. These are either benefits or potential outcomes related to the insurance policy.

Focus on the correct answer: The insurance premium paid to the insurer is the direct and immediate cost associated with purchasing insurance. It represents the price of transferring risk to the insurer.

Clarify why other options are not considered costs: Potential future claim payments are liabilities for the insurer, not costs for the insured. Dividends received are returns on investment, and interest earned on invested funds is income, not a cost.

Conclude the reasoning: The insurance premium is always considered a cost because it is the actual payment made by the insured to obtain coverage, aligning with the definition of cost in financial accounting.