Podcast
Questions and Answers
What happens to the business vehicle if it is damaged in an accident?
What happens to the business vehicle if it is damaged in an accident?
- It will be repaired under the policy.
- Only the business inventory is covered.
- It will not be repaired, but the other party's vehicle is covered. (correct)
- Both vehicles are covered for repairs.
What is essential for an insurer to know in the event of theft?
What is essential for an insurer to know in the event of theft?
- The amount of stock on hand and amount stolen. (correct)
- The total value of all assets.
- The insurance coverage limit.
- The estimated future profits of the business.
Which statement about bad debt insurance is accurate?
Which statement about bad debt insurance is accurate?
- Businesses can take out insurance against bad debt. (correct)
- Only large corporations can insure against bad debt.
- Bad debt can never be insured.
- Bad debts are always fully covered by insurers.
What determines the coverage for damage to a building in an insurance policy?
What determines the coverage for damage to a building in an insurance policy?
What does public liability insurance cover?
What does public liability insurance cover?
What is the significance of 'return on investment' when considering capital growth for a business?
What is the significance of 'return on investment' when considering capital growth for a business?
Which factor is NOT a criterion to indicate the success of a business?
Which factor is NOT a criterion to indicate the success of a business?
In an income statement, which of the following is classified as an expense?
In an income statement, which of the following is classified as an expense?
What distinguishes variable costs from fixed costs?
What distinguishes variable costs from fixed costs?
How is total cost calculated for a business?
How is total cost calculated for a business?
What does the break-even point indicate for a business?
What does the break-even point indicate for a business?
Which of the following statements accurately describes the safety margin in a business?
Which of the following statements accurately describes the safety margin in a business?
Which type of insurance generally offers coverage against the broadest range of risks?
Which type of insurance generally offers coverage against the broadest range of risks?
Study Notes
Business Vehicle Damage
- In case of an accident, the insurance claim process will determine the vehicle's fate.
- Depending on the extent of damage and the policy's terms, the insurer may decide to repair, replace, or write off the vehicle.
Vehicle Theft
- Report the theft to the police immediately.
- Inform the insurer, providing details of the vehicle, date and location of theft, and any available evidence.
Bad Debt Insurance
- It covers losses arising from unpaid invoices, protecting businesses against financial hardship due to debtors' insolvency.
Building Damage Coverage
- The policy's terms and conditions, specifically the 'sum insured' clause, determine the level of coverage for building damage.
- The sum insured represents the maximum amount the insurer will pay for any repairs or rebuild.
Public Liability Insurance
- It protects businesses against financial losses arising from third-party claims due to injuries, damage, or negligent acts.
- This extends to claims for bodily injury, property damage, and legal expenses.
Return on Investment (ROI)
- A high ROI indicates the effectiveness of capital for achieving business growth.
- It measures the profitability of capital invested, considering the return earned compared to the initial investment.
Business Success Criteria
- While profit, sales growth, and market share are commonly considered business successes, employee satisfaction is NOT a primary factor in evaluating a business's overall success.
Income Statement Expenses
- Rent is classified as an expense on an income statement because it represents a recurring cost associated with using an asset for business operations.
Variable vs. Fixed Costs
- Variable costs are directly proportional to the level of production, meaning they increase with higher production.
- Fixed costs remain consistent irrespective of the production volume.
Business Total Cost
- To calculate total cost, businesses sum their fixed costs and variable costs.
Break-Even Point
- This is the point where revenue equals total cost, indicating no profit or loss.
- Businesses aim to operate above the break-even point to achieve profitability.
Safety Margin
- It is the difference between actual sales and the break-even sales volume.
- A higher safety margin indicates a larger buffer for unexpected expenses or lower sales.
Broadest Risk Coverage
- Comprehensive insurance generally offers the most extensive coverage, protecting against a wide range of risks.
- Specific coverage details vary depending on the policy and insurer.
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Description
This quiz assesses various factors that contribute to the success of new business ideas, including ROI, feasibility studies, and the importance of management teams. Understanding these elements will help entrepreneurs make informed decisions and increase their chances of success. Test your knowledge on the critical indicators of business viability.
