Multiple Choice
Which of the following actions would increase your total loan balance (liabilities) on the balance sheet?
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9. Current Liabilities
Types of Liabilities
Multiple Choice
Where do the funds to pay out workers’ compensation claims typically come from?
A
Company's retained earnings only
B
Insurance policies purchased by the employer
C
Employee payroll deductions
D
Federal government grants
Verified step by step guidance1
Understand the concept of workers' compensation: Workers' compensation is a form of insurance that provides wage replacement and medical benefits to employees injured in the course of employment.
Identify the source of funding for workers' compensation claims: Typically, employers purchase insurance policies to cover these claims. This ensures that funds are available to pay out claims when needed.
Clarify why retained earnings are not the source: Retained earnings are profits that a company keeps for reinvestment or other purposes, not specifically allocated for workers' compensation claims.
Explain why employee payroll deductions are not the source: Workers' compensation is generally funded by the employer, not through deductions from employees' paychecks.
Discuss why federal government grants are not the source: Workers' compensation is typically managed at the state level and funded through employer-purchased insurance policies, not federal grants.
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