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

In the context of accounting for insurance policies, the premium for a modified whole life policy is:

Lower than a straight whole life policy in the early years, then increases to a higher fixed amount

Higher than a straight whole life policy throughout the policy term

Paid only once at the inception of the policy

Constant and level for the entire duration of the policy

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Verified step by step guidance

Understand the concept of a modified whole life insurance policy: This type of policy typically starts with lower premiums in the early years and then transitions to higher fixed premiums for the remainder of the policy term. This structure is designed to make the policy more affordable initially.

Compare the premium structure of a modified whole life policy to a straight whole life policy: A straight whole life policy has constant and level premiums throughout the entire duration of the policy, whereas a modified whole life policy has a two-phase premium structure.

Eliminate incorrect options: Analyze the given choices. For example, 'Paid only once at the inception of the policy' refers to single premium policies, which is not relevant here. Similarly, 'Higher than a straight whole life policy throughout the policy term' contradicts the definition of a modified whole life policy.

Focus on the correct description: The correct answer aligns with the definition of a modified whole life policy, where premiums are lower in the early years and then increase to a higher fixed amount for the remainder of the term.

Conclude the reasoning: Based on the analysis, the correct answer is 'Lower than a straight whole life policy in the early years, then increases to a higher fixed amount,' as this matches the premium structure of a modified whole life policy.