IC26 Mock Test Sample 13
These questions cover important concepts in insurance, accounting, taxation, and financial management. Topics include employee benefits like long-service leave, claims settlement ratios, taxation of life insurance profits, and features of different insurance policies such as whole life and children’s deferred plans. It also includes accounting treatments like inventory valuation changes, trial balance errors, and source documents. Budgeting concepts, equity funds, ULIP claim payments, and cash flow activities are tested. Regulatory aspects like KYC norms and financial statement schedules are included. Overall, the set evaluates understanding of insurance operations, accounting principles, financial reporting, and compliance requirements in practical business scenarios.
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1. What is an example of other long-term employee benefit?
A. Compensated absences
B. Profit-sharing (if payable within twelve months)
C. Long-service leave
D. Social security contributions
E. None of the above
2. What does a Percentage of Outstanding Claims to Total Claims Payable ratio below 5% for death claims indicate?
A. Low claims settlement
B. High customer satisfaction
C. High claims settlement
D. Low customer satisfaction
E. None of the above
3. What is the special rate of taxation for profits and gains from life insurance business?
A. 8%
B. 10%
C. 12.50%
D. 15%
E. 20%
4. What is a characteristic of Children's Deferred Insurance?
A. Premiums cease at age 70
B. Actual life insurance commences at age 18 to 22
C. No medical examination required for the child
D. Premiums are returned without interest if the child dies before the vesting age
E. Premiums are paid by the child
5. What is the main purpose of life insurance policies?
A. Providing regular savings
B. Protecting against loss of income due to untimely death
C. Providing additional benefits for education expenses
D. Offering protection against creditors
E. Assisting in post-retirement expenses
6. What account is credited when premiums are collected in advance and a discount is allowed?
A. Premium Account
B. Discounted Value of Premium Deposits
C. Unearned Premium Account
D. Policy Deposit Account
E. Interest Sundries Account
7. When is KYC required for existing customers paying premiums of less than Rs. one lakh per annum?
A. KYC is not required for existing customers
B. KYC is required for all existing customers
C. KYC is required only if they request for services
D. KYC is required if they pay premium of Rs. one lakh or more per annum
E. KYC is required for all existing customers at the claim payout stage
8. An insurer carrying on general insurance business has to comply with the provisions of Schedule _____ for preparing its financial statements.
A. A
B. B
C. C
D. D
E. E
9. When the budget of a branch office is planned, the long term plan is for ___ year(s) and short term plan is for ____ year(s) for the performance budget.
A. 5, 1
B. 3, 1
C. 1, 2
D. 4, 1
E. 5, 2
10. From those listed below which are / is not a part of the 'performance budget' prepared by an insurance company?
A. Only 1
B. Only 2
C. Only 3
D. Both 1 and 2
E. Both 2 and 3
11. If the transaction is - 'Return of Purchased goods' - what is the source document relevant to this transaction?
A. Debit note raised by customer & credit note by entity
B. Debit note raised by entity & credit note by seller
C. Sales invoice of the entity
D. Receipts for cash sales
E. Invoice of supplier
12. During May 2016, Satish sold goods correctly but totaled Rs. 21000 incorrectly. What type of error is this?
A. Financial error
B. Overcasting error
C. Undercasting error
D. Posting error
E. Transposition error
13. What are equity funds?
A. Invest in govt securities & bonds
B. Invest mainly in equity & equity-related instruments
C. Mix of equity & debt
D. Invest only in shares
E. Invest in money market instruments
14. ABC Ltd. changed inventory valuation method. This is ________.
A. Error correction (retrospective)
B. Change in estimate (prospective)
C. Change in accounting policy (retrospective)
D. Prior period item
E. Change in accounting policy (prospective)
15. Identify the feature of whole life insurance plan?
A. Sum assured on death or maturity
B. Premiums payable for lifetime
C. No protection for dependents
D. Premiums for first 3 years only
E. Security for old age
16. In Trial Balance, which error cannot be highlighted?
A. Wrong carry forward
B. Casting
C. Omission
D. Posting
E. Transposition
17. Who monitors the actual performance of a budget?
A. Chairman / Managing Director
B. CFO
C. Budgetary controller
D. Regulators
E. CEO
18. When is claim paid only from fund value in ULIP?
A. Only 1
B. Only 2
C. Only 3
D. Both 1 and 3
E. Both 2 and 3
19. Cash flow from financing activities includes:
A. Loan repayment from policyholders
B. Premium received
C. Other income
D. Borrowings (cash proceeds/payments)
E. Reinsurance claims
20. Which policy provides living benefit primarily and life cover secondarily?
A. Superannuation policy
B. Money back policy
C. Whole life policy
D. Endowment policy
E. Term insurance policy
