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 best describes what a guaranteed renewable provision allows in the context of accounting for insurance contracts?

The policyholder to renew the insurance policy without the insurer being able to cancel it, although premiums may be increased for an entire class of policyholders.

The policyholder to renew the policy at the same premium rate regardless of changes in risk.

The insurer to increase premiums for individual policyholders based on their claims history.

The insurer to cancel the policy at any time for any reason.

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Verified step by step guidance

Understand the concept of a guaranteed renewable provision: This provision in insurance contracts allows the policyholder to renew their policy without the insurer being able to cancel it, ensuring continuity of coverage.

Clarify the implications of the provision: While the insurer cannot cancel the policy, they are allowed to increase premiums for an entire class of policyholders, typically based on factors like age or risk class, but not for individual policyholders based on their claims history.

Eliminate incorrect options: Review the provided options and rule out those that contradict the guaranteed renewable provision. For example, options suggesting cancellation by the insurer or fixed premium rates regardless of risk changes are inconsistent with the provision.

Focus on the correct description: The correct answer aligns with the principle that the policyholder can renew the policy without cancellation by the insurer, but premiums may be adjusted for a group of policyholders rather than individuals.

Summarize the reasoning: The guaranteed renewable provision ensures policyholder protection against cancellation while allowing insurers to manage risk by adjusting premiums for a class of policyholders, not based on individual claims history.