IC26 - ASSOCIATE - Life Insurance Finance - 1

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Q 1. What is the fundamental principle of double-entry bookkeeping?

Every transaction affects two accounts: one is debited and another is credited.

Transactions are recorded to have a permanent record of them.

Bookkeeping is the art of recording business transactions.

The accountant is responsible for reporting business transactions.

Financial reporting involves preparing and presenting financial statements.
 
Q 2. What is the significance of the "utmost good faith" principle in insurance contracts?

It requires complete disclosure of all material facts by the proposer

It allows the insurer to charge any premium they deem fit

It provides full protection against all risks

It allows the insurer to deny claims without investigation

None of the above
 
Q 3. What happens when the deposit amount is less than the required premium for the proposer?

The policyholder is refunded the excess amount

The shortfall is collected from the policyholder

The policy is considered lapsed and coverage is terminated

The excess amount is added to the proposal deposit

The deposit amount is adjusted toward renewal premiums
 
Q 4. Which of the following is not included in the expenses of management?

Traveling expenses

Printing and stationery

Rents

Policy premiums

Depreciation
 
Q 5. What provision is made in case of diminution in the value of unlisted investments?

No provision is made

Provisioning based on RBI guidelines

Provisioning based on market value

Provisioning based on book value

Provisioning based on fair value
 
Q 6. What is the purpose of an endorsement in an insurance policy?

To provide additional benefits and covers

To issue renewal notices

To compute premium adjustments

To determine the geographical area

To change the registration mark
 
Q 7. How is the Gross Book Value of a fixed asset defined?

A. Current market value of the asset

B. Initial purchase cost of the asset

C. Historical cost or other amount substituted for historical cost

D. Market value minus accumulated depreciation

E. None of the above
 
Q 8. What is the primary purpose of a Funds Flow Statement?

To show the sources and applications of cash during a period

To provide information about an enterprise’s cash receipts and payments during an accounting period

To evaluate changes in the net assets of an enterprise

To classify cash flows into operating, investing, and financing activities

To assess the liquidity of the business and determine dividend policy
 
Q 9. What does the feature of "diversity" in taxation imply?

Tax revenues should be collected from various sources.

Taxes should be proportional to income.

The tax system should not encourage inefficient resource allocation.

Taxes should be assessed, collected, and administered easily.

The amount of taxes must be predictable for taxpayers.
 
Q 10. What does the Prevention of Money Laundering Act (PMLA), 2002 aim to regulate?

Only banks and financial institutions.

Only insurance institutions.

All financial institutions, including insurance institutions.

Only government institutions.

Only private institutions.
 
Q 11. How is the cost of a claim calculated for life insurance policies?

It includes only death claims

It includes only maturity claims

It comprises the policy benefit amount, including specific settlement costs

It excludes surrender and annuity claims

It is based on the premium paid by the policyholder
 
Q 12. What is the purpose of the accounting entry: Bad and doubtful debts expense account Dr. X To Provision for doubtful debts X

To record a bad debt

To create a provision for doubtful debts

To reconcile cash book and passbook

To calculate bank charges

To record interest on overdraft
 
Q 13. When does the risk commence for cash payments?

Immediately

After the receipt of the premium by the insurer

After 30 days

After 60 days

After 90 days
 
Q 14. Which of the following is not included in the expenses of management?

Auditor’s remuneration

Medical fees

Policy premiums

Law charges

Fees to members of the corporation
 
Q 15. How are impairments in the value of listed securities and investments treated?

Recorded as expenses in the Revenue/Profit & Loss Account

Added to the historical cost of the security

Ignored in financial statements

Treated as capital losses

Added to the revaluation reserve



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