Start General Insurance Writing Mock Test-IC46

There are various kinds of general insurance such as Motor Insurance, Energy insurance, Marine insurance, Liability insurance, Engineering insurance, Property insurance, and international insurance The insurance company is required for making a cash payment to compensate for the damage. The term "general insurance" refers to a policy that compensates the buyer for any loss other than death. In General insurance, everything is included except the life of the policyholder.  For each individual unit, each insurance provider company creates a separate revenue account.

Process of General Insurance Accounts Preparation

General Insurance Accounts are also prepared using the mercantile accounting scheme. Profit/Loss from a Revenue Account is allocated to the Profit and Loss Account. Account of a general insurance company shows both the amount of reserve to be carried forward and the profit or loss for the year. In General Insurance Accounts all expenses are included such as assessment of claims, legal fees, and fees for a police report, etc. It must not include any management’s expenses. If any amount is deducted from this, it must be shown separately. A separate amount for claims should be paid in India and outside India, along with the amount of premium taken from the company outside India. The final account of the general insurance company needs to be prepared as per IRDA Regulations, 2002. It includes Revenue Account, Profit and Loss Account, Balance Sheet, etc.

1. Profit and Loss Account: In these accounts, the profit and loss of different businesses are displayed. It also keeps track of general expenditures.
2. Revenue Accounts: A revenue Account is prepared for each and every insurance such as fire, marine, motor etc.

3. Income and expenses: Incomes and expenses of particular insurance business are recorded and profit and loss are transferred.

4. Balance Sheet: The balance sheet records various assets and liabilities of the General Insurance Companies. The balance sheet is prepared using Form A. It shows general insurance companies' assets and liabilities.

For General and Life, Insurance companies the form for the Balance Sheet is the same. It is to be checked that difference in revenue account reveals profit or loss of business. The revenue account is closed by transfer to concerned fund accounts such as fire fund and marine fund etc. Some of the contracts are still active on the accounting date, reflecting the risk that has not yet expired. The revenue account begins and ends with the respective value of the fund in addition to recording normal revenue and expenditure. The balance sheet prepares details regarding share capital, reserves, and surplus, borrowing. As far as the application of funds is concerned, it includes investment, loans, current assets, and current liabilities.  As a result, a generalized provision is made because it is impractical to make for particular policies.  

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