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

Insurance contracts are unilateral in nature. What does this mean?

The insured must pay premiums only if a loss occurs.

Only the insurer makes a legally enforceable promise to perform if a specified event occurs.

Both the insurer and the insured are equally obligated to perform specific actions.

The contract can be terminated at any time by either party without penalty.

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Verified step by step guidance

Understand the term 'unilateral contract' in the context of insurance. A unilateral contract is one where only one party makes a legally enforceable promise.

In insurance contracts, the insurer promises to pay for covered losses if a specified event occurs, such as an accident or damage, while the insured is not obligated to perform any specific action beyond paying premiums.

Analyze the options provided in the problem. The correct interpretation of a unilateral contract is that only the insurer makes a legally enforceable promise to perform if a specified event occurs.

Eliminate incorrect options: For example, the insured does not pay premiums only if a loss occurs; premiums are paid regularly regardless of loss. Both parties are not equally obligated, and the contract cannot be terminated at any time without penalty.

Conclude that the correct answer is: 'Only the insurer makes a legally enforceable promise to perform if a specified event occurs.' This aligns with the definition of a unilateral contract in insurance.