C46 - General Insurance A_c Preparation Mock Test 20

1. Which of the following is correct about Facultative Reinsurance?

a) It is generally purchased to cover risks which are pre-determined and are out of scope of the Primary Insurer

b) It is for long term contracts or risks pertaining to certain risky business segments

c) It is commonly purchased for large, unusual or catastrophic risks

d) Under this, the reinsurance company is under an obligation to provide reinsurance protection

2. The balance in Share Forfeited Account after the reissue of forfeited shares is transferred to:

a) General Reserve A/c

b) Capital Redemption Reserve A/c

c) Capital Reserve A/c

d) Revenue Reserve A/c

3. Which are investments other than current investments and are held for more than one year from the date of their acquisition?

a) Management investments

b) Short-term investments

c) Current investments

d) Long-term investments

4. What refers to increases in economic benefits during an accounting period in the form of inflows or increase of assets and decrease in liabilities?

a) Liabilities

b) Assets

c) Equity

d) Revenues

5. Which reports provide information on process lapses including underwriting, claims, accounts, internal control, investments, etc.?

a) Main reports

b) Long-form reports

c) Audit reports

d) Management reports

6. Which of the following can Auditors report?

a) Obtaining satisfactory information and explanations necessary for the audit

b) Receipt of proper and adequate returns from branches

c) The certification of actuarial valuation of liabilities by the appointed actuary

d) All of the above

7. Which of the following can be an income or gain?

a) Capital expenditure

b) Capital receipt

c) Revenue expenditure

d) Revenue receipt

8. Generally provisions for taxation are made on current taxable income and tax calculated on taxable income is called __________.

a) Tax expenses

b) Deferred Tax

c) Current Tax

d) None of these

9. A machine purchased for Rs. 40,000 on 01.04.2007 is depreciated at 10% p.a. under the Diminishing Balance Method. What is the value of the machine as on 01.04.2011?

a) Rs. 20,458

b) Rs. 22,458

c) Rs. 26,244

d) Rs. 32,654

10. A __________ is one, benefit of which is exhausted within one accounting period.

a) Capital receipt

b) Revenue transaction

c) Capital transaction

d) Capital expenditure