AAMI COMP Paper Questions and
Answers Verified Solutions Latest Update
2026/2027
Question:
Partnership.
Answer:
is the voluntary association of two or more people who have combined their resources to carry on
as co-owners of a lawful enterprise for their joint profit.
Question:
Limited Partnership.
Answer:
involves at least one general partner and one or more limited partners.
Question:
Corporation.
Answer:
is an artificial being, invisible, intangible, and existing only in the contemplation of law, an entity
that is something that has a distinct existence separate and apart from the existence of its individual
members.
Question:
S Corporation.
Answer:
comes from the IRS Code, which permits corporations to retain the limited-liability feature of
regular corporations while being taxed as partnerships.
,Question:
Limited Liability Company.
Answer:
is not a corporation but a new form of business ownership (approved in most states since
approximately 1994); combines aspects of partnerships with limited liability of a corporation;
owners known as members.
Question:
Demand.
Answer:
refers to how much (quantity) of a product or service is desired by buyers.
Question:
Quantity Demanded.
Answer:
is the amount of a product people are willing to buy at a certain price.
Question:
Supply.
Answer:
represents how much the market can offer.
Question:
Quantity Supplied.
Answer:
refers to the amount of a certain good producers are willing to supply when receiving a certain
price.
Question:
,Law of Demand.
Answer:
if all other factors remain equal, the higher the price of a good, the less people will demand that
good. The higher the price, the lower the quantity demanded.
Question:
Law of Supply.
Answer:
demonstrates the quantities that will be sold at a certain price. The higher the price, the higher the
quantity supplied.
Question:
Equilibrium.
Answer:
when supply and demand are equal.
Question:
Disequilibrium.
Answer:
whenever the price or quantity are not equal.
Question:
Excess Supply.
Answer:
if the price is set too high, this will be created within the economy and cause market inefficiencies.
Question:
Excess Demand.
, Answer:
this is created when the price is set below the equilibrium price.
Question:
Variable Expense.
Answer:
is a cost which is uniform per unit, but fluctuates in direct proportion to change in the related total
activity or volume.
Question:
Fixed Expenses.
Answer:
are a cost that, for a given period of time and range of activity called the relevant range, doesn't
change in total, but becomes progressively smaller on a per unit basis as volume increases; these
expenses do not increase with increased business, nor do they decrease with declining business
activity.
Question:
Average Pricing.
Answer:
an approach in which the total cost for a given period is divided by quantity sold in that period to
set a price, regardless of variable and fixed costs.
Question:
Operating Ratios.
Answer:
a comparison of profit and each item of expense in the income statement expressed as a percentage
of sales income; can be compared to the industry standards in regard to measuring the possible
growth of the business.
Answers Verified Solutions Latest Update
2026/2027
Question:
Partnership.
Answer:
is the voluntary association of two or more people who have combined their resources to carry on
as co-owners of a lawful enterprise for their joint profit.
Question:
Limited Partnership.
Answer:
involves at least one general partner and one or more limited partners.
Question:
Corporation.
Answer:
is an artificial being, invisible, intangible, and existing only in the contemplation of law, an entity
that is something that has a distinct existence separate and apart from the existence of its individual
members.
Question:
S Corporation.
Answer:
comes from the IRS Code, which permits corporations to retain the limited-liability feature of
regular corporations while being taxed as partnerships.
,Question:
Limited Liability Company.
Answer:
is not a corporation but a new form of business ownership (approved in most states since
approximately 1994); combines aspects of partnerships with limited liability of a corporation;
owners known as members.
Question:
Demand.
Answer:
refers to how much (quantity) of a product or service is desired by buyers.
Question:
Quantity Demanded.
Answer:
is the amount of a product people are willing to buy at a certain price.
Question:
Supply.
Answer:
represents how much the market can offer.
Question:
Quantity Supplied.
Answer:
refers to the amount of a certain good producers are willing to supply when receiving a certain
price.
Question:
,Law of Demand.
Answer:
if all other factors remain equal, the higher the price of a good, the less people will demand that
good. The higher the price, the lower the quantity demanded.
Question:
Law of Supply.
Answer:
demonstrates the quantities that will be sold at a certain price. The higher the price, the higher the
quantity supplied.
Question:
Equilibrium.
Answer:
when supply and demand are equal.
Question:
Disequilibrium.
Answer:
whenever the price or quantity are not equal.
Question:
Excess Supply.
Answer:
if the price is set too high, this will be created within the economy and cause market inefficiencies.
Question:
Excess Demand.
, Answer:
this is created when the price is set below the equilibrium price.
Question:
Variable Expense.
Answer:
is a cost which is uniform per unit, but fluctuates in direct proportion to change in the related total
activity or volume.
Question:
Fixed Expenses.
Answer:
are a cost that, for a given period of time and range of activity called the relevant range, doesn't
change in total, but becomes progressively smaller on a per unit basis as volume increases; these
expenses do not increase with increased business, nor do they decrease with declining business
activity.
Question:
Average Pricing.
Answer:
an approach in which the total cost for a given period is divided by quantity sold in that period to
set a price, regardless of variable and fixed costs.
Question:
Operating Ratios.
Answer:
a comparison of profit and each item of expense in the income statement expressed as a percentage
of sales income; can be compared to the industry standards in regard to measuring the possible
growth of the business.
