CPCU 540 Questions And Answers
Capital budgeting
The planning and managing of a corporation's long-term investments
Capital structure
A corporation's mix of long-term debt and equity
Previous
Play
Next
Rewind 10 seconds
Move forward 10 seconds
Unmute
0:09
/
0:15
Full scr...
CPCU 540 Questions and Answers
Capital budgeting - answer The planning and managing of a corporation's long-term
investments
Capital structure - answer A corporation's mix of long-term debt and equity
Fair value - answer The market value, either actual or estimated, of an asset or a
liability
Sarbanes-Oxley Act of 2002 - answer A federal statutory law governing corporate
directors in the areas of investor protection, internal controls, and penalties, both civil
and criminal.
Stakeholder - answer Anyone with a financial interest in the corporation
Statutory accounting principles (SAP) - answer The accounting principles and
practices that are prescribed or permitted by an insurer's domiciliary state and that
insurers must follow
Working capital - answer A 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 - answer The 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) - answer (#shares x price per share) - (#shares
x par value)
Comprehensive income - answer A 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 - answer Beginning inventory + additions to inventory - ending
inventory
Current assets - answer A 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 - answer A 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 - answer An accounting method that spreads out the expense
of a purchase over the life expectancy of the item
Financial statement - answer A document that quantitatively presents an
organization's financial activities or status
Form 8-K Required When... - 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) - answer The rules and
procedures to be used in the preparation of an organization's financial statements
Gross margin (gross profit margin) - answer The percentage of sales remaining after
deducting the cost of goods sold from sales, calculated by dividing gross profit by sales
Gross profit - answer An income statement value that represents sales or operating
revenue minus the cost of goods sold
Gross Profit (equation) - answer Sales (operating revenues) - cost of goods sold
Inventory - answer An 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 - answer Unpaid losses and loss adjustment expenses
Unearned premium
Major components of shareholder equity - answer Paid-in capital
Retained earnings
, Accumulated other comprehensive income
Treasury stock
Marketable Securities - answer An asset classification that includes temporary
investments that can easily be converted into cash
Mark-up - answer Gross profit expressed as a percentage of the cost of goods sold
Net Income (equation) - answer Revenue - Expenses (including depreciation) +
Gains - Losses - Taxes
Notes to financial statements include - answer - A brief description of the company's
operations
- Significant accounting policies and changes
- Detailed listing of long-term debt
- Loss contingencies and other commitments
- Financial information by business segment
- Any other explanations management deems necessary
Operating income - answer An income statement value that reflects income that
results from the normal operations of the business during the period covered by the
statement; calculated as the goss profit less selling, general, and administrative
expenses
Operating Income (equation) - answer Gross Profit - General Operating Expenses
Other Comprehensive Income - answer Change in unrealized value of investments
Foreign currency translations gains or losses
Changes in minimum pension liability
Paid-in capital - answer The total amount invested in an organization by the owners
(i.e. The amount raised through the sale of stock)
Paid-In-Capital (equation) - answer Par value + paid in capital over the par value
Prepaid Expenses - answer An asset classification that represents the amount that
has already been paid for services that have not been received or used
Receivables - answer An asset classification that consists of the amounts owed to a
company by customers and other outsiders
Retained earnings - answer The cumulative net income that an organization has
retained, after payment of dividends, for reinvestment in the organization's operations
Revenue - answer The inflow of assets, usually cash or accounts receivable,
resulting from the sale of products or the rendering of services to customers
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Pogba119. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
