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Sml Biz ACCT/FIN F21 > Quiz 2 > Flashcards

Quiz 2 Flashcards

1
Q

revenues

A

total amount of income from sales

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2
Q

alt term for revenue

A

top line / total sales

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3
Q

alt term for income

A

profit / earnings

total left after expenses

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4
Q

direct loss

A

loss resulting from physical damage to property

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5
Q

indirect loss (consequential)

A

loss as a result of direct loss (consequential)

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6
Q

risk transfer

A

risk mgmt technique that passes risk to another party

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7
Q

business income (interruption) insurance

A

protects against loss of income due to suspension of ops by physical damage only

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8
Q

objective of risk management

A

ensuring losses do not prevent the business from operating effectively or maximizing wealth of owners

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9
Q

alt term for direct loss

A

damage, physical

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10
Q

alt term for business income insurance

A

business interruption insurance

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11
Q

is physical damage required for business income insurance to come into effect

A

yes

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12
Q

3 definitions of risk

A

uncertainty
possibility of financial loss
possibility of an undesired outcome

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13
Q

loss control

A

risk management technique that seeks to reduce the possibility that a loss will occur and reduce the severity of those that do occur

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14
Q

financial goal of a business

A

maximize the wealth of the owners

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15
Q

type of risk management technique utilized when insurance is purchased

A

risk transfer

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16
Q

do companies share information about insured people

A

yes, insurance score because of SSN

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17
Q

what is BOP

A

business owners policy

business property and business liability insurance into one business insurance policy

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18
Q

4 common oversights business owners make per Bob

A

not getting coverages day 1 of business
homeowners policy does not cover business use
not purchasing general liability ins in 1st year
not using cyber liability ins for online data

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19
Q

should you be honest about your business with your insurance agent

A

yes, totally

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20
Q

does being dishonest cost you in the long run

A

yes, can result in failed claims, denial of ins, or higher rates

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21
Q

will a business pay higher premiums without general liability insurance in its first year of operations

A

yes, will carry penalties

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22
Q

does cyber liability insurance cover the cost of fixing problems that lead to the data breach at the company

A

yes

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23
Q

does cyber liability insurance cover business interruption

A

yes

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24
Q

whether cyber-liability insurance coverage is becoming more important over time, or less important

A

more important, data breaches are not covered under general

25
Q

whether insurance companies’ payments for claims under cyber-liability insurance are rising, or falling

A

rising exponentially

26
Q

whether premiums are cyber-liability coverage are expensive, or inexpensive

A

very cheap

27
Q

5 policies the typical business owner should purchase, according to Bob

A 
General Liability
Property Insurance
Business interruption
Workers Comp
Product/Professional Liability
28
Q

when a business should begin to have coverage under a general liability policy

A

Day 1

29
Q

will the ins company provide legal help with covered incidents on general liability ins

A

Usually the company has a team of lawyers on retainer

30
Q

what are general liability premiums based on

A

net revenue or square footage of the business

31
Q

type of policy that covers employees injured on the job

A

workers comp

32
Q

type of business that needs products liability coverage

A

manufacturers

33
Q

type of business that needs professional liability coverage

A

those that offer advice

34
Q

policies a BOP includes

A

Property and General Liability

35
Q

4 mistakes business owners make with insurance according to Bob

A

Not being fully honest with agent
getting instant quote rather than using an agent
not listening to agent recos or having a business operation prone to losses or theft (messy/insecure)
failing to adjust policies with growth

36
Q

should you purchase from a web site with one policy or a professional that offers multiple company rates

A

no

37
Q

whether it is a good idea to ask other business owners for referrals to insurance professionals

A

yes, those that are happy usually have better coverage

38
Q

what can happen (2 things) to a business that does not implement loss control recommendations made by its insurance carrier

A

penalties and higher premiums

claims not approved/less insurance available

39
Q

how often you should speak with your insurance professional, according to Bob

A

6 months ideally yearly at minimum

40
Q

whether it’s better if you want to speak on a regular basis with your professional, or better if you won’t want to

A

better if you want to, you should want to update instead of thinking it is stressful

41
Q

3 benefits of borrowing from friends and family, as discussed in class

A

may be your business’s only way to borrow
ability to tailor terms to your needs
lower interest rates

42
Q

stage in the life-cycle in which borrowing from family and friends is common

A

startup / survival

43
Q

how the borrower benefits from a non-amortizing loan vs. an amortizing loan

A

requires lower payments for a higher lump sum to repaid at the maturity date, non-am have a lower debt service requirement

44
Q

the loan amount that requires use of the IRS minimum interest rate in loans between family members

A

the current IRS minimum rate

45
Q

whether the IRS minimum interest rate is higher, or lower, than the rate on bank loans

A

no banks loans are usually higher, based on US treasuries

46
Q

2 potential causes of damaging your personal relationship with a family member or friend that you borrow from

A

losses from lending to you, you didn’t repay them

tax implications

47
Q

2 ways that other (non-lending) family members or friends may be affected when you borrow from a family member or friend

A

could feel resentful or entitled to reciprocation

48
Q

whether the lender (family member or friend) must pay income tax on the interest you pay them

A

yes if loan, gift not deductible

49
Q

whether the lender can deduct the amount loaned to you if you do not repay the loan

A

yes the amount of the money loaned

50
Q

whether a tax deduction increases tax, or decreases tax

A

decreases

51
Q

whether gift tax applies to gifts to charities, or to individuals

A

only gifts to individuals not charities

52
Q

who pays gift tax, the donor or the recipient of the gift

A

paid by the donor not the recipient

53
Q

whether gift tax is paid by the poor, the middle-class, or the wealthy

A

only by the very wealthy

54
Q

whether filing a gift tax return may be required even if no gift tax is owed

A

yes, talk to a tax attorney

55
Q

be able to state 2 guidelines to follow when borrowing from family and friends, as discussed in class

A

only borrow money that your friends and family can afford to lose
put the loans in writing similar to a loan agreement

56
Q

benefits of documenting a loan from a family member or friend (including benefits for the family member or friend who loaned you the money)

A

documents that this is a loan not a gift, not subject to gift tax
prevents misunderstandings on terms and payments

57
Q

imputed interest

A

interest income the lender must add to their tax return if the actual rate on the loan is less than the IRS minimum

58
Q

proceeds

A

money obtained from an event or activity

Sml Biz ACCT/FIN F21 (10 decks)

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