Chapter 11

Question 1

Risk management

Answer 1

Identifying key business risks, their likely effect on the business and putting plans in place to minimize them from happening

Question 2

Methods of Risk Reduction

Answer 2

Fireproof Materials
Security devices
Security systems
Contingency plans
Copies of valuable documents

Question 3

Business insurance

Answer 3

Property insurance 
Key person insurance 
Public liability insurance 
Product liability insurance 
Fidelity guarantee insurance

Question 4

Fidelity guarantee insurance

Answer 4

Dishonesty and fraud by an employee

Question 5

Principles of insurance

Answer 5

Insurable interest
Utmost good faith
Indemnity - average clause
Contribution
Subrogation

Question 6

Similarities between households and business insurance

Answer 6

Identify and manage possible risks
Insure against all reasonable risks
Fill out proposal form
Insurance policy

Question 7

Taxes businesses pay

Answer 7

Corporation tax - profits by companies
Value added tax
Custom duties - imports from outside EU
PRSI

Question 8

Form P21

Answer 8

Tax rebate

Question 9

Form P45

Answer 9

When leaving a job

Question 10

Form P60

Answer 10

Amount of pay, income tax and PRSI paid by an employe

Question 11

Tax evasion

Answer 11

Tax payers illegally evade paying the full amount of tax owed

Question 12

Tax Avoidance

Answer 12

Taxpayers take advantage of the tax system to legally reduce the amount of tax they owe

Question 13

Insurance

Answer 13

A contract where the insured pays a premium to the insurer for a promise to compensate the insured in the event of a financial loss occurring

Question 14

Importance of Insurance

Answer 14

Business survival is protected
Improves cash flow 
Can save money
Makes exporting easier
Greater financial security and peace of mind

Question 15

How to be Insured

Answer 15

Contact insurance company
Proposal form (applying for insurance cover)
Risk is assessed and premium is calculated
Policy is issued
Claim is made

Question 16

Insurable Interest

Answer 16

The person must benefit from the continued existence of the item being insured and suffer financially from its loss

Question 17

Utmost Good Faith

Answer 17

The insured must give truthful information and disclose all relevant facts when applying for insurance

Question 18

Indemnity

Answer 18

You cannot profit from insurance
The insurer compensates for the actual financial loss suffered
Over-insurance and under-insurance

Question 19

Average Clause Formula

Answer 19

Sum insured
——————- X Loss
True Value

Question 20

Contribution

Answer 20

When two or more insurers are involved

they will divide the total cost of the claim between them

Question 21

Subrogation

Answer 21

Insurers can sue the third party who caused the loss of an item to occur after paying full compensation

Question 22

How does Taxation affect Business

Answer 22

Lower profits
Higher costs
Higher prices
Locate to take advantage of incentives

Question 23

Tax Audit

Answer 23

A detailed examination by the Revenue Commissioners

In the event of out of work

Question 24

Capital Acquisitions Tax

Answer 24

Tax on money as a gift inheritance

Question 25

Tax Credit

Answer 25

Amount of money one can earn tax-free

Reduces the amount of tax owned