IC26 Mock Test Sample 14
These questions cover key concepts in insurance, accounting, taxation, and finance. Topics include liquidity, solvency, accounting standards, budgeting, and financial ratios used in insurance companies. They also test understanding of insurance products like annuity, term plans, and whole life policies, along with regulatory aspects such as PAN requirements and IFRS standards. Concepts like internal users, indirect expenses, and investment classifications are included. Overall, the set helps in strengthening knowledge of financial management, reporting standards, and operational practices in insurance and business environments, which are essential for professional exams and practical decision-making in finance-related roles.
Q1. Which of these can be categorized as internal users for an organization?
a) The Debtors
b) The Shareholders
c) The Investors
d) The people related to the organisation
Q2. As per guidelines for appointment of statutory auditors of insurance companies, maximum ceiling limit for an audit firm with regards to engaging in the statutory audit of insurance companies is __________.
a) Maximum 1 company
b) Maximum 2 companies
c) Not more than 1 life insurance company and no limit of non-life
d) Maximum 3 companies with a ceiling of 2 life insurance
Q3. __________ involves movement of cash.
a) Bonus Issue
b) Rights Issue
c) Depreciation by Straight line method
d) Both Bonus Issue and Rights Issue
Q4. As per the principle of _______ in cash management, an entity should be able to convert any asset to cash within a short period of time for payout of claims.
a) Flexibility
b) Emergency
c) Safety
d) Liquidity
Q5. Which of the given schemes invest a major portion of their money in Government Securities like Treasury Bills and long dated securities?
a) ELSS schemes
b) Debt schemes
c) Gilt schemes
d) Money market schemes
Q6. Which of the given below Functional Ratio is used most commonly in the life insurance industry?
a) Fixed to worth
b) Cost of telephone charges per force policy
c) Percentage of surplus fund to total premium
d) Distribution yield
Q7. Which of the following are indirect expenses of unit linked plans?
a) Incentives to agents
b) Incentives to marketing staff
c) Policy expenses
d) Printing and stationery
Q8. Mention the phase/period when acquisition costs is expensed?
a) At the end of each financial year
b) At the start of each financial year
c) At the end of each financial quarter
d) In the period in which they are incurred
Q9. The main advantage of a VA statement is ________.
a) Promotes greater accountability
b) Provides a good measure of size and importance
c) Increases transparency
d) Helps identify problem areas in growth
Q10. Which of the below statements correctly explains Annuity Insurance Plan?
a) Lump sum withdrawal + regular annuity payments
b) Sum assured + bonus at maturity
c) Fund value + sum assured
d) Lump sum on death
Q11. A young software engineer with growing income should choose which plan?
a) Term Plan with return of premium
b) Money back plan
c) Whole life insurance plan
d) Convertible whole life insurance plan
Q12. When is an asset classified as sub-standard?
a) Non-performing up to 12 months
b) Non-performing over 12 months
c) Non-performing up to 6 months
d) Identified losses but not written off
Q13. Where should provision for PF and Pension Fund be included?
a) Outstanding expenses
b) Accrued liabilities
c) Staff expenses
d) Amounts due to trustees
Q14. Why did the need for Accounting Standards arise?
a) Ensure professional expertise
b) Diversify businesses
c) Regulate financial reporting
d) Determine ownership
Q15. How is the current ratio calculated?
a) Total assets / total liabilities
b) Current assets / total liabilities
c) Current assets / current liabilities
d) Total liabilities / current assets
Q16. What does solvency for an insurance company relate to?
a) Payment of premiums
b) Payment of claims
c) Investment in real estate
d) Liquidity of assets
Q17. When should a person apply for PAN?
a) Only if income exceeds threshold
b) If income is less than taxable limit
c) If income equals taxable limit
d) If income exceeds taxable limit and PAN not allotted
Q18. Which of the following is one of the key features of IFRS 4?
a) Compliance with IFRS 4
b) Compliance with IFRS 3
c) Compliance with IFRS 9
d) Compliance with IFRS 15
Q19. If a transaction is recorded in exactly the reverse manner, which type of error is it?
a) Error of commission
b) Casting error
c) Posting error
d) Complete reversal of entry
Q20. Which type of investments is excluded for funds pertaining to Group Insurance Business?
a) Government securities
b) Corporate bonds
c) Real estate properties
d) Equity shares
