ie! EBISCO CSEC POB SOLUTIONS - LEGAL ASPECTS OF THE BUSONESS JAN 2022 P2 02 (a) State three reasons why it is important for firms to have proper documentation in all of its business transactions. Three reasons why it is important for firms to have proper documentation in all its business transactions are for research purposes, to help protect the integrity of the firm and for legal purposes, (b) Outline the purpose of each of the following types of documents. Pro forma invoice ~ The purpose of a pro forma invoice is for customers to make payments for goods and services upfront. Purchase requisition ~ The purpose of a purchase requisition is for employees to request the purchase of goods. (c) List four types of non-t Four types of insurance policies are public liability, employers’ liability, motor vehicle insurance and goods in transit, (@) Describe four principles upon which insurance is based. + Indemnity refers to principle that the policy holder must be compensated for the loss incurred. + Subrogation means that the compensation the policy holder receives will replace the item that has been damaged. + Utmost good faith refers to the legal obligation of parties involved, to be truthful by disclosing all relevant information and not misrepresenting any information, + Pooling of risks refers to the paying of a small premium by many policy holders to form a large pool from which a policyholder is paid if he/she suffers a loss. () Explain three ways in which insurance could be used to lower the risks associated with business. * By paying insurance, the firm pays small premiums which are usually much lower than the cost that the business will incur in the event that a risk occurs. The risk is therefore placed on the insurance company as opposed te the firm. + Additionally, a business with insurance is in a better position to raise capital, since investors and lending agencies have more faith in businesses that have insurance coverage. The ability to raise capital reduces the risk of becoming bankrupt, + Finally, insurance helps to reduce the risk of the business becoming a negative image in the eyes of the public. Companies that do not have insurance are more likely to get bad reviews if ‘employees or members of the public suffer loss/injury and are not compensated. © 1868) 333-9371 ()ebiscotutoring () @ebiscotutoring