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

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Which of the following best describes how an employee's group life insurance contract can be handled upon retirement at age 59 1/2?

Transferred to accounts receivable

Converted to an individual life insurance policy

Recorded as a note receivable

Written off as a bad debt expense

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Verified step by step guidance

Understand the nature of group life insurance: Group life insurance is typically provided by employers as a benefit to employees during their employment. Upon retirement, the employee may have options for continuing coverage.

Identify the options for handling the group life insurance contract upon retirement: The options provided in the problem include transferring to accounts receivable, converting to an individual life insurance policy, recording as a note receivable, or writing off as a bad debt expense.

Evaluate the feasibility of each option: Transferring to accounts receivable or recording as a note receivable does not align with the nature of insurance contracts, as these are financial accounting terms related to receivables, not insurance. Writing off as a bad debt expense is also irrelevant because it pertains to uncollectible receivables, not insurance policies.

Focus on the correct option: Converting to an individual life insurance policy is a common practice when an employee retires. This allows the employee to maintain life insurance coverage independently of the group plan provided by the employer.

Conclude the reasoning: The correct handling of the group life insurance contract upon retirement is to convert it to an individual life insurance policy, as this ensures continuity of coverage for the retiree.