CPCU 540
Capital budgeting - correct answerThe planning and managing of a corporation's long-term investments Capital structure - correct answerA corporation's mix of long-term debt and equity Fair value - correct answerThe market value, either actual or estimated, of an asset or a liability Sarbanes-Oxley Act of 2002 - correct answerA federal statutory law governing corporate directors in the areas of investor protection, internal controls, and penalties, both civil and criminal.Stakeholder - correct answerAnyone with a financial interest in the corporation Statutory accounting principles (SAP) - correct answerThe accounting principles and practices that are prescribed or permitted by an insurer's domiciliary state and that insurers must follow Working capital - correct answerA liquidity measure that is calculated by subtracting current liabilities from current assets. It is used to determine a company's ability to finance immediate operations (to buy inventory, finance growth, and obtain credit) Accounting - correct answerThe classification, analysis, and determination of the appropriate method of reporting the effects of the bookkeeping records in an organization's financial statements Additional Paid-In-Capital (equation) - correct answer(#shares x price per share) - (#shares x par value) Assets Unique to Insurers - correct answerPremium Receivables Reinsurance recoverables Deferred policy acquisition costs 1 / 3
Balance sheet - correct answerThe financial statement that reports the assets, liabilities, and owners' equity of an organization as of a specific date Balance Sheet Equation - correct answerAssets - liabilities = shareholder's equity (net worth) Comprehensive income - correct answerA measure of income that goes beyond that reported on the income statement by including items such as unrealized gains and losses Cost of Goods Sold - correct answerBeginning inventory + additions to inventory - ending inventory Current assets - correct answerA balance sheet asset classification that includes case and other assets that are expected to be converted into cash, sold, or exchanged within the buisness's normal operating cycle, usually one year Current liabilities - correct answerA balance sheet liability classification that includes obligations whose payments are reasonably expected to require the use of cash or the creation of other current liabilities within one year Depreciation expense - correct answerAn accounting method that spreads out the expense of a purchase over the life expectancy of the item Financial statement - correct answerA document that quantitatively presents an organization's financial activities or status Form 8-K Required When... - correct answer- Material definitive agreements entered
- Release of non-public information
- Creation of a direct financial obligation
- Change of independent auditor
- Departure or election of directors/principal officers
Generally accepted accounting principles (GAAP) - correct answerThe rules and procedures to be used in the preparation of an organization's financial statements 2 / 3
Gross Margin (equation) - correct answerGross profit / sales Gross margin (gross profit margin) - correct answerThe percentage of sales remaining after deducting the cost of goods sold from sales, calculated by dividing gross profit by sales Gross profit - correct answerAn income statement value that represents sales or operating revenue minus the cost of goods sold Gross Profit (equation) - correct answerSales (operating revenues) - cost of goods sold Inventory - correct answerAn asset classification that consists of goods available for sale to customers; for a manufacturing company, also includes raw materials and finished goods Liabilities Unique to Insurers - correct answerUnpaid losses and loss adjustment expenses Unearned premium Major components of shareholder equity - correct answerPaid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Marketable Securities - correct answerAn asset classification that includes temporary investments that can easily be converted into cash Mark-up - correct answerGross profit expressed as a percentage of the cost of goods sold Net Income (equation) - correct answerRevenue - Expenses (including depreciation) + Gains - Losses - Taxes
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