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

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

What is the primary purpose of the surrender charge in a deferred annuity?

To discourage early withdrawals and help the insurer recover initial costs

To reduce the insurance company's tax liability

To increase the annuity's interest rate for the policyholder

To provide a bonus payment to the annuitant upon surrender

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Verified step by step guidance

Understand the concept of a deferred annuity: A deferred annuity is a financial product where the policyholder invests money, and the payout begins at a later date. It is designed for long-term savings and retirement planning.

Define surrender charge: A surrender charge is a fee imposed by the insurance company when the policyholder withdraws funds from the annuity before a specified period, typically during the early years of the contract.

Identify the purpose of the surrender charge: The primary purpose is to discourage early withdrawals, ensuring that the policyholder remains invested for the long term. This helps the insurer recover initial costs associated with setting up the annuity, such as commissions and administrative expenses.

Analyze the incorrect options: The surrender charge does not reduce the insurance company's tax liability, increase the annuity's interest rate, or provide a bonus payment to the annuitant. These are unrelated to the function of the surrender charge.

Conclude the correct answer: The surrender charge is primarily designed to discourage early withdrawals and help the insurer recover initial costs, aligning with the long-term nature of deferred annuities.