Multiple Choice
When cash is surrendered from a recently-issued whole life insurance policy, how should this transaction be classified on the balance sheet?
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9. Current Liabilities
Types of Liabilities
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Under the business income without extra expense coverage form, coverage is NOT provided for which of the following?
A
Loss of business income due to a covered peril
B
Net income that would have been earned if no loss had occurred
C
Additional expenses incurred to continue operations at a temporary location
D
Continuing normal operating expenses, including payroll
Verified step by step guidance1
Understand the concept of 'Business Income Without Extra Expense Coverage Form': This type of insurance coverage is designed to compensate a business for loss of income due to a covered peril, but it does not cover additional expenses incurred to continue operations.
Identify the key elements of coverage: The policy typically covers loss of business income, net income that would have been earned, and continuing normal operating expenses, including payroll.
Analyze the exclusion: The policy explicitly excludes coverage for additional expenses incurred to continue operations at a temporary location. This is because the 'Without Extra Expense' form is designed to cover income loss, not operational costs beyond the normal scope.
Compare the options provided: Evaluate each option against the coverage and exclusions outlined in the policy. The excluded item is 'Additional expenses incurred to continue operations at a temporary location.'
Conclude the analysis: Recognize that the correct answer aligns with the exclusion specified in the policy, which is additional expenses incurred to continue operations at a temporary location.
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