IC 46 – GENERAL INSURANCE ACCOUNTS PREPARATION & REGULATION OF INVESTMENT
1) 2) 3) 4) 5)
How much amount in General Insurance claim expenses is permissible? General Insurance business consists of which type of claims? ___________________ Cost is acquisition cost. What are the items included in acquisition cost? What are the deductions can be made in commission paid and whom to make it? 6) State the IRDA section regarding Commission? 7) Agency commission service tax included or excluded according to _____________ guidelines. 8) According to IRDA, no payments are made in kind. It refers to the type of which concept? 9) What is referred under section 40C, as per Insurance Act, 1938? 10) According to ___________ Regulation Act, ____________ must be presented. 11) According to which Accounting Standard, the Revenue A/c Disclosure is prepared? 12) The Final Accounts are audited by Statutory Auditors and they are appointed by whom? 13) The Account which is prepared in local currencies are converted in Indian currency as per which Accounting Standard? 14) In India only Annual basis is adopted for insurance for determination of _______________ all departments of business including _______________, _______________, ___________. 15) The financial statements and audit reports according to IRDA Act, 2002, protect the interests of whom? 16) Indian GAAP on Insurance Accounts comprises specific regulations which include _______? 17) The schedule B with accounting regulations for preparation of financial statements are belongs to which part? 18) Overview of Schedule B ______________. 19) What are the Accounting Standards as applicable in Schedule B part? 20) The provisions of Section 64 V(I) (II) B of the Insurance Act, 1938 – reserve for unexpired risks shall be created in respect of _________________. 21) What is meant by premium deficiency? 22) Equity Securities and derivative instruments shall be measured in? 23) What do you understand by Catastrophe Reserves? 24) The disclosures forming part of financial statements are described under which part? 25) Ageing of claims is? 26) Schedule B – Part III dealt for _______________. 27) Schedule 3 refers to ______________. 28) What method loss shall be measured? Page 1 of 9
IC 46 – one word questions
29) An insurance company carrying on general insurance business is required to prepare Balance Sheet, Revenue A/c and Profit & Loss A/c with _____________. 30) For a company engaged in general insurance business premium is recognised. 31) What are the sources of funds to an insurance company and state its schedule numbers? 32) General insurance companies are required to prepare separate revenue A/cs. What are they? 33) What is the percentage for apportionment of managerial expense? 34) What is the general rule to compute the cash flow statement by indirect method? 35) What are the activities carried down in cash flow statement? 36) Profit after Tax /Net premium = 37) Gross commission paid / gross direct premium income 38) Ratio time ______________, growth ______________, 39) Accounting Principles, Accounting Standards, Accounting Process & Accounting Conventions 40) Calculate Cash from operations: Book profit Rs.1000/-; Depreciation Rs.500/-; Sale of fixed assets Rs.250/-; increase inventories Rs.600/-; increase creditors Rs.600/-. 41) In India, insurance business is adopted under which basis? 42) What are the terms included in cost? 43) Increase current liabilities; decrease current assets; then, what aspect in cash from operations? 44) Where the accounting ratio can be obtained from? 45) Non life insurance companies’ strong enough ratio is ________. 46) Which section of the Insurance Act deals with the preparation of financial statements? 47) National Insurance Co. Ltd. given the following particulars related to Reinsurance: Commission received during the year 2014-15 = Rs.30000 Commission receivable on 01st April 2014 = Rs. 5000 Commission receivable on 31st March 2015 = Rs. 2000 What amount will be shown in Revenue A/c? 48) A direct insurer assumes by way of primary insurance contract to a second insurance carrier called __________. 49) Role of insurance brokers is _____________. 50) Treaty reinsurance means ___________. 51) What is the formula for if ‘profit commission is an additional commission percentage payable to a ceding insurer’? 52) Reinsurance arrangements are broadly divided into ___________. 53) A Plant’s useful life is 10 years. Depreciation amount of Rs.30 lakhs. The company has changed depreciation under SLM. At the end 6 th year, the balance useful life was re-estimated at 8 years. How much th depreciation will be arrived from at the 7 year? 54) Non life insurance policy purchased on 24/03/2007 of US $ 100000, for the Exchange rate on 31/03/2007 is Rs.47.00. Date on actual payment on Page 2 of 9
IC 46 – one word questions
05/06/2007 is Rs.47.50. Calculate the loss/gain for the financial years 2006-07 & 2007-08: 55) Government grants related to depreciable fixed assets to be treated as deferred income which is to be recognised in the P&L account in proportion to the Depreciation on those are changed over the useful life of the asset. According to AS 12, the apportionment amount, deferred Govt. grant which side it will appear in Balance Sheet after which head? 56) Investments are assets held for earning income, capital appreciation. What you think investments held as stock-in-trade? 57) SBI Bank has classified its total investment on 31/03/2014 into three categories (a) held to maturity (b) available for sale (c) held for trading. Comment the policy of the bank. 58) New India Assurance Company have three type of investments on 31/03/2013 (a) maturity (b) available for sale (c) held for Trading. How it will measure according to AS 13? 59) Financial Statement should disclose whether actuarial valuation is made at the end of the accounting period? 60) Leave encashment is accounted for on Pay-As-You-Go method. 61) M Insurance Company’s Interim Financial Report (IFR) quarterly: Earned Rs.800 lakhs. Pre-tax profit in the quarter ending 30/06/2008. But expect to incur losses of Rs.250 lakhs in each of the remaining three quarters. Effective income tax rate is 35%. Calculate the income-tax expense to be reported for 1st quarter as per AS 25 and total Tax expenses. 62) X Ltd. purchased Machinery on 01/01/2002 for Rs.20 lakhs. WDV of the machinery on 31/03/2008 for Rs.28 lakhs. The recoverable amount of the machine is Rs.11 lakhs. What is the impairment loss? 63) The business transactions are recorded first in the primary books of accounts known as ___________. 64) Cash deposited into bank Rs.100000/-. What is the entry in cash book? 65) Trading Account shows debit side higher balance. What is the result? 66) Profit & Loss Account Credit balance is transferred to where? 67) Which accounting standard provides segmentation detailed information? 68) All transactions are events; but all events are ____________. 69) Which account deals with expenses according to double entry system? 70) Earnings per share deals with which Accounting Standard? 71) How much percentage of reserve for unexpired risks? 72) Bank Reconciliation Statement is the statement prepared by an entity that reconciles which balances? 73) Cheque issued but not presented for payment, which book it will be added? 74) What is an effect of ‘direct payments and remittances by bank cheque’? 75) What is an effect in Cash Book on dishonour of bills? 76) Who shall be verified and certified for investment returns? 77) Who will give approval annually on investment policy? 78) Who will implement investment policy? Page 3 of 9
IC 46 – one word questions
79) What is the aim of the policy? 80) Who will be the members of the invest committee? 81) __________ Investment returns are to be submitted by every insurer to the regulator. 82) What is the rating scale for short-term investment? 83) What is solvency margin? 84) What is nominal column? 85) In which column Income/Investment are posted? 86) What is the Profit Sale on investment from the following: Equity Shares 1000; Each Rs.100; Normal value Rs.400000; Capital value Rs.500000/-. 87) The right to issue share will be added to _________. 88) According to _______ Act ______ Section describes General Insurance Company’s Annual Report. 89) Annual Report contains information of ______, _________. 90) When the auditor provides a modified opinion, the opinion cannot be ________. 91) What type of audits, the insurance companies are normally conducted? 92) The main auditor submits the report to whom? 93) The true and Fact view of the report based on __________ accounts. 94) Financial Statements are said to be true, when they are? 95) Proper internal audit system and control will ensure that the financial statement of an entity will exhibit _______. 96) An increase in interest rate is due to higher actual or anticipated inflation __________ likely to increase. 97) From the following, What is the Trial Balance Total: Sales Rs.100000/-; Purchase Rs.30000/-; Salary Rs.15000/-; Purchase Return Rs.5000/-; Sales Return Rs.10000/-; Capital Rs.50000/-; Land Rs.40000/-; Wages Rs.5000/-; Rent Paid Rs.10000/-; Furniture Rs.50000/-; Machinery Rs.35000/-. 98) Minimum liability test involves ____________. 99) What are the methods acceptable under IFRS 9? 100) Under what circumstances can an entity classify financial assets that meet the amortised cost criteria as at FVTPL?
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IC 46 – one word questions
ANSWERS 1) 70 2) Accepted but not paid & claim intimated but not accepted and paid 3) Relation 4) Agents, Brokers, Corporate Agents, Bank under Bancassurance or all intermediaries 5) ST & TDS paid to Govt. Account, Insurance commission 6) U/s IRDA 1999, 40(1), 40A(3), 42 E, Insurance Act, 1938 7) Excluded 8) Money measurement concept 9) Rs.5 lakhs – Net premium whichever is higher 10)
As per IRDA, 2002 (FS)
11)
AS 01
12) Shareholders Public Company, CAG in case of Government Company (Page 422) 13)
AS 11 (Page 421)
14) Underwriting Result Miscellaneous (Page 424) 15)
,
Fire,
Marine,
Motor,
Engineering
and
Policyholder and all the stakeholders involved
16) Insurance Act, 1938, Companies Act, 1956, AS issued by ICAI (Page 430) 17)
Part V for preparation of Financial Statements (Page 431)
18)
Part I, II, III, IV and V (Page 432)
19)
AS 3, AS 13 & AS 17
20) Fire & Miscellaneous 50%; Marine Cargo 50%; Marine Hull 100% (Page 433) 21) Related and Maintenance Costs exceed the related reserve for unexpected risks (Page 434)
Page 5 of 9
IC 46 – one word questions 22) Fair value: The lowest of the last quoted closing price in stock market securities list (Page 435) 23)
As prescribed by Authority (Page 436)
24)
Schedule B Part II (Page 438)
25)
O/s more than 6 months (Page 438)
26)
GI for preparation of FS (Page 441)
27)
Premium earned (not) (Page 451)
28)
Historical Cost subject to impairment provision (Page 483)
29)
Schedule B (Page 486)
30)
Over the contract period (or) period of risk (Page 483)
31) Share capital Rs.5, Borrowing and fair value charge account 5,6,7 (Page 489) 32)
Fire, Marine and Miscellaneous (Page 492)
33)
75% and 100% (Page 494)
34)
NP + Non cash expenses – non cash incomes (Page 523)
35) Operating activities, investing activities and financial activities (Page 520) 36)
Give formula Net earnings ratio
37)
What is non commission ratio?
38)
Calculate Gross premium to shareholder’s fund ratio.
For the FY Gross premium Shareholder funds
2005-06 5675.54 4161.69
2004-05 5103.16 3735.22
39)
What are the legal aspects of GI Financial Accounting?
40) 600
Book profit 1000+500. Dep. + increased creditors 600 – Income stock
2100 – 600 = 1500 41)
Only annual basis (Page 393)
42) Incurred Claims Net, Commission Acquisition Cost, Operation expenses (Page 396) 43)
Increase cash value (Page 521)
44)
Financial Statement (Page 526) Page 6 of 9
IC 46 – one word questions 45)
Solvency margin ratio (Page 534)
46)
Section II (Page 535)
47)
30000 + 5000 – 2000 = 33000
48)
Reinsurer
49)
An intermediary (Page 550)
50) A treaty is an automatic re-insurance facility which covers portfolio of risks (Page 554) 51)
An agreed formula (Page 588)
52)
Two (I) Facultative (II) Treaty
53)
(30 – (30/10) *6) / 8 = 1.5
54)
AS 11; 100000 * 46.60 = 4660000; 100000 * 47 = 4700000
Exchange loss Rs.40000/- (4700000 – 4660000) in 2006-07 100000 * 47.50 = 4750000 – 4700000 = 50000 should be debited in P&L in 2007-08 55)
Liabilities side after R&S; But before Secure loan
56)
It is not in investment. It is current assets as per AS 13
57)
In Bank not applicable AS 13 only RBU Rule
58) Held to maturity investment is carried at acquisition cost less amortise amount. Available for sales are carried at market to market. Held for trading investments are valued at weekly. 59) Actuarial valuation and the method used for accrual period; if not based on actuary report. 60) As regard leave encashment which is accounted for on PAY – AS – YOU – GO basis. It is not in accordance with AS 15. It should be accounted on accrual basis. 61) 1st quarter 800 x 35/100 = Rs.280 lakhs; Annual Tax expenses = Rs.17.5 lakhs ( II quarter 250 x 35/100 = Rs.87.5 lakhs; 3 rd quarter 87.5 x 3 = Rs.262.5 lakhs (280 – 262.50 lakhs) 62)
Impairment loss = carrying amount – recoverable amount
12 lakhs – 11 lakhs = 1 lakh 63)
Journals (6)
64)
Bank A/c Debit; Cash A/c Credit;
65)
Gross loss Page 7 of 9
IC 46 – one word questions 66)
Balance Sheet : Liability side Add: Capital or shown separately
67)
AS 17
68)
Transaction (Page 20)
69)
Nominal A/c
70)
AS 20
71)
100% Marine; 50% for other classes of business (Page 132)
72)
Pass Book and Cash Book (Page 253)
73)
Cash Book (Page 256)
74)
Less Cash Book (Page 256)
75)
Less Cash Book (Page 256)
76)
CEO / Chief of Investment (Page 610)
77)
Board of Directors (Pages 607, 610)
78)
Investment Committee (Pages 607, 610)
79)
Must ensure adequate return (Page 607)
80) Minimum Two – Non executive Director, CEO, Chief of Finance, Chief of Investment decision and the appointed actuary (Page 606) 81)
Actuary (Page 605)
82)
A1, A2, A3, A4 and D1 (Page 600)
83)
Assets of an insurer – liabilities
84)
Investment purchase; sold, bonus, etc. (Page 673)
85) Cum Interest or Ex Interest received or receivable investment (Page 623) 86)
400000/500000 x 100000 = 80000
87)
Carrying amount of original holding (Page 642)
88)
1956, 217 (Page 648)
89)
Operation and Financial Performance
90)
True and Fair (Pages 658, 667)
91)
SA, IA, CA, OA UA and IA (Page 670)
92)
Statutory Auditor
93)
Income and P&L A/c (Page 700) Page 8 of 9
IC 46 – one word questions 94)
Factually correct (Page 701)
95) A True and Fair view of profit or loss and state of affairs of the entity (Page 748) 96)
Normal Cash outflows are likely to increase
97)
Rs.155000/-
98) A comparison of recognised insurance liabilities against cash flows (Page 815) 99)
Amortised cost and fair value (Page 816)
100) Where the investment is held to maturity (Page 816)
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