CPCU 540 Ch.1

Question 1

Anyone with a financial interest in the corporation

Answer 1

Stakeholder

Question 2

A federal statutory law governing corporate directors in the areas of investor protection, internal controls, and penalties, both civil and criminal

Answer 2

Sarbanes-Oxley Act of 2002

Question 3

A liquidity measure that is calculated by subtracting current liabilities from current assets. It is used to determine company’s ability to finance immediate operations (to buy inventory, finance growth, and obtain credit)

Answer 3

Working capital

Question 4

A corporation’s mix of long-term debt and equity

Answer 4

Capital structure

Question 5

The planning and managing of corporation’s long-term investments

Answer 5

Capital budgeting

Question 6

A common set of accounting standards and procedures used in the preparation of financial statements to ensure consistency of presentation and reported results

Answer 6

Generally Accepted Accounting principles (GAAP)

Question 7

The accounting principles and practices that are prescribed or permitted by an insurer’s domiciliary state and that insurers must follow

Answer 7

Statutory Accounting Principles (SAP)

Question 8

Financial standards developed by International Accounting Standards Board (IASB)

Answer 8

International Financial Reporting Standards (IFRS)

Question 9

The market value, either actual or estimated, of an asset or a liability

Answer 9

Fair value