IC26 - ASSOCIATE - Life Insurance Finance - 4
IC26 - ASSOCIATE - Life Insurance Finance - 4
Find More Mock Tests Here
Q 1. Under what circumstances should any excess amount retained for depreciation or known liabilities be treated as a reserve instead of a provision?
When it exceeds the amount deemed necessary by the directors
When it is less than the estimated liability
When it is in accordance with accounting standards
When it is required by tax regulations
When it is stated explicitly in the financial statements
Q 2. How does VA statement contribute to national income?
It reduces taxes for employees
It provides investment opportunities for employees
It indicates the company’s contribution to national income
It increases corporate income taxes
It determines the salaries of employees
Q 3. What should an enterprise do with any excess of the carrying amount of a defined benefit asset?
A. Deduct it from the employee's salary
B. Carry it forward as an asset
C. Recognize it as an expense
D. Refund it to the government
E. None of the above
Q 4. What is the significance of a Cash Flow Statement to investors and creditors?
To evaluate changes in net assets of an enterprise
To assess the liquidity of the business and determine dividend policy
To classify cash flows into operating, investing, and financing activities
To provide information about an enterprise’s cash receipts and payments during an accounting period
None of the above
Q 5. How are profits and gains of life insurance business calculated according to the Income Tax Act 1961?
Average of the surplus from actuarial valuation.
Annual average of the surplus or deficit.
Adjustment of tax paid by deduction at source.
Tax on profits and gains of life insurance business.
Exemption from deduction at source.
Q 6. What does the KYC process aim to achieve in a risk-based approach?
To understand the risks associated with customer and product profiles.
To categorize customers based on their occupation.
To provide insurance cover to government-owned companies.
To establish trustworthiness of databases.
To verify the source of funds of salaried employees.
Q 7. Which account is debited when a car is purchased for cash?
Car account
Cash account
Seller's account
Purchaser's account
Debit account
Q 8. What is the purpose of having separate investment accounts in insurance companies?
To track revenue and expenses separately
To differentiate between life and non-life insurance policies
To ensure proper allocation of funds for investments
To facilitate internal audits
None of the above
Q 9. In the case of dishonored cheques for premiums, which account is debited?
Premium Account
Deposit Account
Bank Account
Policy Ledger
Cash Outgo Book
Q 10. What is the purpose of the "Policy Stamps A/c" in insurance accounting?
To record expenses for office equipment
To track agent performance
To account for the purchase of policy stamps
To calculate employee salaries
None of the above
Q 11. What does the expression "liability" include, as per the instructions for preparation of financial statements?
Only actual, current liabilities
Only disputed or contingent liabilities
All liabilities in respect of contracted expenditure and disputed or contingent liabilities
Only liabilities that have been approved by the board of directors
Only liabilities related to investments
Q 12. What is the main purpose of an endorsement in an insurance policy?
To change the insurer's name and address
To provide evidence of agreed changes in the policy
To determine the premium computation
To issue a new policy
To change the period of insurance
Q 13. How should an enterprise recognize short-term employee benefits according to the Standard?
A. Recognize the discounted amount as an expense
B. Recognize the undiscounted amount as a liability
C. Treat it as an asset
D. Deduct it from the employee's salary
E. None of the above
Q 14. What was the major impact of the liberalisation of the insurance sector in India in 1999?
Introduction of IRDA for regulatory oversight
Entry of 23 more life insurers into the market
Expansion of traditional plans offered by LIC
Requirement of 75% premium investment in Government Securities
Restriction on innovative product development
Q 15. Which part of the First Schedule of the Income Tax Act deals with life insurance business?
Part A
Part B
Part C
Part D