IC26 - ASSOCIATE - Life Insurance Finance - 2

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Q 1. Which factor is typically considered a limiting factor in budgeting?

Sales

Capital

Labor problems

Raw materials

Expenditure

Q 2. What does the "Consistency Concept" in accounting imply?

Accounting policies should be consistent from one period to another

Accounting policies should be changed frequently to adapt to market conditions

Accounting policies should be based on the legal form of transactions

Accounting policies should be based on the substance of transactions

Accounting policies should be determined by external regulatory authorities

Q 3. What does the current ratio indicate about a company's ability to pay its current liabilities?

Whether it can pay off all liabilities immediately

Whether it can generate sufficient cash for short-term debt

Whether it can pay off long-term debt

Whether it can cover all expenses

Whether it can invest in long-term assets

Q 4. What distinguishes Solvency from Liquidity in financial terms?

Solvency is the ability to pay short-term debts, while Liquidity is the ability to cover long-term obligations

Solvency is the capacity to cover liabilities, while Liquidity is the availability of cash and assets to pay immediate debts

Solvency refers to an organization's profitability, while Liquidity refers to its overall financial health

Solvency is the ability to generate profits, while Liquidity is the ability to manage financial risks

Solvency is the measure of an organization's efficiency, while Liquidity is the measure of its solvency

Q 5. If a property is not let out, what is the income from the house property?

Nil

The potential rent the property could generate

The actual rent received

The assessed value by the municipality

The property's market value

Q 6. Why are most investments of insurance companies likely to be categorized as 'available for sale' (AFS) under IFRS 4?

Because it provides tax benefits

Because it aligns with the nature of insurance company liabilities

Because it guarantees a fixed return on investment

Because it minimizes actuarial interpretation

None of the above

Q 7. What is the formula to calculate gross profit in a trading setup?

Net sales - Cost of goods sold

Gross sales - Returns from customers

Opening stock + Purchases - Closing stock - Other expenses

Opening stock + Purchase of raw materials - Closing stock - Other expenses

Net sales - Returns

Q 8. What type of annuity payments depend on the continued existence of the annuitant?

Immediate life annuity

Annuity Certain

Guaranteed annuity

Deferred Annuity

Fixed Term (MarriagEndowment Policy

Q 9. What is the "Netting of claims method" in accounting for claim payments?

Deducting all outstanding premiums from the claim amount

Treating the total amount payable after deductions as an outstanding claim

Calculating interest on policy loans

Sending claim discharge forms to policyholders

Initiating the transaction with a bank account

Q 10. What is the maximum percentage of the fund that can be invested in 'other investments' for the life insurance business?

10%

15%

20%

25%

30%

Q 11. When should certain expenses be recognized on a deferred basis?

When they would provide benefits over some time.

When they are incurred in the next financial year.

When they are prepaid.

When they are included in the provision for outstanding expenses.

When they are included in the schedule.

Q 12. What is one of the major objectives of introducing Human Resource Accounting (HRA) systems in an enterprise?

To increase employee salaries and bonuses

To evaluate whether the human resources are being properly utilized and allocated

To reduce corporate income taxes

To improve decision-making in areas of human resource management

To design appropriate systems of marketing and sales

Q 13. How can financial ratios be useful in the analysis of a company's financial position?

Measuring debt service coverage

Assessing turnover

Analyzing profitability

Identifying significant changes in elements

Highlighting areas needing further investigation

Q 14. What is the main focus of debt schemes in mutual funds?

Investing in equities and equity-related securities

Investing in fixed-income securities like bonds and debentures

Maintaining a balanced portfolio of equities and debt instruments

Investing in government securities (G-secs)

Investing in short-term securities with maturities of less than a year

Q 15. What is the exemption limit for medical reimbursement provided by the employer according to Section 17(2)?

Rs. 5,000/-

Rs. 10,000/-

Rs. 15,000/-

Rs. 20,000/-

None of the above.


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