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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is true regarding the insurance amount in a credit life policy?

The insurance amount is unrelated to the loan balance.

The insurance amount remains fixed regardless of the loan balance.

The insurance amount typically decreases as the outstanding loan balance decreases.

The insurance amount increases as the loan is repaid.

Previous problemNext problem

Verified step by step guidance

Understand the concept of a credit life insurance policy: A credit life insurance policy is designed to pay off a borrower's outstanding loan balance in the event of their death. The insurance coverage is directly tied to the loan balance.

Analyze the relationship between the insurance amount and the loan balance: In a credit life policy, the insurance amount typically decreases as the loan balance decreases because the coverage is meant to match the remaining debt.

Evaluate the options provided: Review each statement to determine its accuracy based on the nature of credit life insurance policies.

Eliminate incorrect options: For example, the statement 'The insurance amount is unrelated to the loan balance' is incorrect because the insurance amount is directly tied to the loan balance. Similarly, 'The insurance amount remains fixed regardless of the loan balance' is incorrect because the coverage decreases as the loan is repaid. Lastly, 'The insurance amount increases as the loan is repaid' is also incorrect because the coverage decreases, not increases.

Identify the correct answer: The correct statement is 'The insurance amount typically decreases as the outstanding loan balance decreases,' as this aligns with the purpose of a credit life insurance policy.