IC26 Mock Test Sample 10
This set of questions mainly covers core concepts of accounting, insurance, taxation, and financial reporting. It includes topics such as human resource reporting, related party transactions, premium payment guidelines, preparation and purpose of balance sheet, meaning of policy lapse, and methods used in insurance accounting. It also covers VA statements, segment reporting, ULIP concepts, management reporting, and risk disclosure requirements. Additionally, it includes provisions from the Income Tax Act, IRDA role, trial balance preparation, depreciation treatment, fund classification, and accounting standards in India. Overall, the questions focus on regulatory compliance, financial reporting standards, insurance operations, and basic accounting principles used in the insurance and corporate sectors.
1. What is the main reason for the necessity of human resource reporting in organizations?
a) To increase employee salaries and bonuses
b) To improve productivity
c) To ensure comparability and completeness of financial statements
d) To reduce corporate income taxes
e) To provide investment opportunities for employees
2. What is a related party transaction?
a) Any transaction conducted between enterprises
b) A transfer of resources or obligation between related parties, regardless of whether a price is charged
c) A transaction involving a significant amount of money
d) A transaction conducted within the same geographical segment
e) None of the above
3. What payment methods are advised for premiums beyond Rs. 50,000 according to the guidelines?
a) Cash, demand drafts, and credit cards
b) Cheques, demand drafts, credit cards, or any other banking channels
c) Only cheques
d) Credit cards and mobile wallets
e) Only demand drafts
4. What is the main purpose of preparing a balance sheet?
a) To record day-to-day transactions
b) To confirm the arithmetical accuracy of ledger accounts
c) To show the financial condition of an organization on a specific date
d) To calculate profits and losses
e) To list all ledger accounts and their balances
5. What is the meaning of "Lapse" in the context of life insurance policies?
a) The policyholder receives a lump sum payment
b) The policy becomes paid-up for a reduced sum assured
c) The policy is cancelled due to discontinued premiums
d) The policyholder surrenders all rights under the policy
e) The policy matures and pays out the sum assured
6. Which method of providing for outstanding premiums is more popular among insurance companies?
a) Method 1
b) Method 2
c) Method 3
d) Method 4
e) Method 5
7. What is one of the advantages of VA statement related to bonus schemes?
a) It determines the salaries of employees
b) It calculates the productivity bonus for employees
c) It reduces operating expenses
d) It provides investment opportunities for employees
e) It increases corporate income taxes
8. When should reportable segments be identified in the current year?
a) If they meet the criteria from the preceding period
b) Only if they show a profit
c) If they are newly established in the current year
d) If they exceed 10% of the total revenue
e) None of the above
9. How are direct expenses like commission and medical expenses amortized in unit-linked plans?
a) They are not amortized
b) They are charged proportionately to the fund every year
c) They are fully charged at the end of the insurance policy term
d) They are recovered from policyholders
e) None of the above
10. What is included in the Management Report with regard to risk exposure?
a) Disclosure of the company's stock prices
b) Certification of compliance with industry standards
c) Disclosure of overall risk exposure and strategy to mitigate it
d) Declaration of customer satisfaction levels
e) Verification of employee training programs
11. What was the primary reason for the slow growth in the mixed economy model adopted post-Independence?
a) Lack of government intervention
b) Absence of professional management
c) Efficient workforce
d) Excessive reliance on the private sector
e) Overinvestment in basic industries
12. What does Part A of the First Schedule to the Income Tax Act 1961 state?
a) Profits of life insurance business to be computed separately
b) Computation of profits of life insurance business
c) Adjustment of tax paid by deduction at source
d) Tax on profits and gains of life insurance business
e) Exemption from deduction at source
13. For integrally related transactions, what premium amount should be examined closely for money laundering risk?
a) Rs. 10,000
b) Rs. 25,000
c) Rs. 50,000
d) Rs. 75,000
e) Rs. 1,00,000
14. When is a trial balance typically prepared?
a) At the end of every reporting period
b) At the beginning of a reporting period
c) Only when financial statements are required
d) Monthly
e) Annually
15. What is the role of IRDA in India?
a) Regulate insurance business of life insurers, non-life insurers, and reinsurers
b) Manage government-owned insurance companies
c) Promote investment in the insurance sector
d) Conduct internal audits for insurance companies
e) None of the above
16. What does ULIP stand for?
a) Unit Linked Investment Plans
b) Universal Life Insurance Policies
c) Unit Linked Insurance Plans
d) Unified Liability Insurance Policies
e) Unilateral Life Investment Plans
17. What happens to depreciation on house property in insurance accounting?
a) It is credited to a reserve account
b) It is debited to the bank account
c) It is credited to depreciation account of assets
d) It is transferred to the appropriate asset account
e) None of the above
18. Which fund is suitable for investors who want to preserve capital and accept lower returns?
a) Debt Fund
b) Balanced Fund
c) Equity Fund
d) Money Market Fund
e) None of the above
19. What is the purpose of the "Unpaid Salary Account"?
a) To record salaries paid in advance
b) To account for salaries not yet paid
c) To calculate employee bonuses
d) To record bonuses paid
e) To track employee tax deductions
20. How many Accounting Standards were formulated by ASB in India?
a) 20
b) 25
c) 32
d) 50
e) 60
