CPCU 540 Practice Questions - CPCU 540 Contributing To Insurer Financial Performance Exam

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Under U.S. GAAP, an insurer records deferred acquisition costs (DAC). What is the primary accounting rationale for the DAC asset?

To match acquisition expenses against the premium revenue they help generate over the policy term To accelerate expense recognition for tax purposes To remove acquisition costs from the income statement entirely To increase statutory surplus during periods of growth

Correct Answer:

To match acquisition expenses against the premium revenue they help generate over the policy term

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