Definition: Insurance and taxes are terms used in accounting to describe two different aspects of business transactions. Insurance refers to contracts that provide protection against risks associated with an asset or a product. For example, a policy might cover the cost of repairing damage to a car if it is damaged during transport. The insurance company would pay for any losses resulting from this type of risk. Taxes, on the other hand, are levied by governments to fund government services and support industries. These taxes can be defined in terms of income or consumption levels. For example, sales tax is levied on goods sold to a consumer. It's the amount of money someone pays for using something that has been bought or sold. Insurance and taxes often work together to manage risk within an organization. Insurance helps cover the costs associated with loss or damage, while taxes help fund government services and support industries.
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