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 policies work for insurers because they help do what to their risks?

Guarantee profits on every policy

Increase the likelihood of claims

Eliminate all financial risks entirely

Spread or pool their risks among many policyholders

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Verified step by step guidance

Understand the concept of risk pooling: Insurance companies operate by spreading or pooling risks among a large number of policyholders. This means that the financial burden of claims is distributed across many individuals, reducing the impact of any single claim.

Recognize that insurers do not guarantee profits on every policy: While insurers aim to be profitable overall, they cannot guarantee profits on every individual policy due to the unpredictability of claims.

Acknowledge that insurance does not eliminate all financial risks: Insurance reduces financial risks by pooling them, but it does not completely eliminate them. Insurers still face risks such as unexpected high claim volumes or catastrophic events.

Understand why spreading risks is effective: By pooling risks, insurers can predict the likelihood of claims more accurately using statistical models and actuarial science, allowing them to set premiums that cover expected costs and generate profit.

Connect the concept to the problem: The correct answer highlights the fundamental principle of insurance—spreading or pooling risks among many policyholders—to manage financial uncertainty effectively.