IC26 Mock Test Sample 15
These questions cover key concepts of life insurance, accounting, taxation, and financial reporting. Topics include types of LIC policies, ULIPs, IFRS adoption, and IRDA regulations. It also explains accounting practices like trial balance, treatment of outstanding claims, salary suspense accounts, and balance sheet effects. Important tax concepts such as perquisites and medical reimbursements are included. The set highlights financial statement objectives, external users, and human resource valuation models. It also tests understanding of policy features like convertible whole life plans and lapsed policies. Overall, it strengthens knowledge required for insurance exams and practical financial decision-making.
Q1. Which type of insurance plans offered by LIC during the pre-liberalisation era came with a savings component?
a) Unit linked insurance plans
b) Pension plans
c) Participating plans (endowment plans or money back plans)
d) Health plans
Q2. Who is the Convertible whole life insurance plan suitable for?
a) Young individuals with high current income
b) Individuals with low income
c) Parents with minor children
d) Young individuals with potential for higher income in the future
Q3. How are outstanding death claims typically recorded in the books of accounts?
a) By debiting Outstanding Death Paid Account and crediting Bank Account
b) By debiting Outstanding Death Paid Account and crediting Outstanding Death Account
c) By debiting Bank Account and crediting Outstanding Death Account
d) By debiting Outstanding Death Account and crediting Outstanding Death Paid Account
Q4. What is the purpose of preparing a schedule for advances made for the purchase of cycles in the context of finalizing accounts?
a) To reconcile the ledger balance with the schedule
b) To obtain confirmation of the balances from employees
c) To mark subsequent adjustments in the schedule
d) To adjust advances before closing accounts
Q5. According to the text, what is the fundamental dichotomy in accounting practices?
a) Between human and non-human capital
b) Between financial and non-financial assets
c) Between tangible and intangible assets
d) Between current and non-current liabilities
Q6. What is the main aim of financial statements?
a) To provide detailed information on tools and techniques
b) To aid in decision making through analysis
c) To present comparative financial statements
d) To calculate absolute and percentage changes
Q7. If an employee is provided with rent-free accommodation valued at Rs. 1,50,000 and salary is Rs. 9,44,500, what is total taxable income?
a) Rs. 9,44,500
b) Rs. 9,91,175
c) Rs. 10,35,175
d) Rs. 10,85,175
Q8. What is the purpose of adopting IFRS by Indian insurance companies?
a) To comply with IRDA regulations
b) To follow Indian accounting standards
c) To align with global accounting standards (IFRS)
d) To apply for a license from IRDA
Q9. In a trial balance, if total debits are equal to total credits, what does this indicate?
a) The trial balance is incorrect
b) The accounting equation is balanced
c) There are no transactions recorded
d) The ledger accounts have errors
Q10. What happens if the conversion option is not exercised in the Convertible whole life insurance plan?
a) Policy continues as whole life insurance
b) Premiums cease at age 70
c) Premiums increase significantly
d) Policy converts automatically to endowment
Q11. What action is taken in case of lapsed policies with unpaid interest on policy loans?
a) Extension to repay
b) Foreclosure action is taken
c) Discount on interest
d) Premiums are waived
Q12. What constitutes an investment asset according to IRDA regulations?
a) Shareholder funds only
b) Policyholders’ ULIP reserves only
c) Both shareholder funds and policyholders funds
d) Policyholders funds only
Q13. What action should be taken for salary suspense account (advance salary)?
a) Prepare schedule and mark adjustments
b) Obtain confirmation from employees
c) Reconcile advances before closing
d) Provision for outstanding expenses
Q14. What model is mentioned for computing value of human resources?
a) Lev and Schwartz model
b) Flamholtz model
c) Hekimian and Jones model
d) Jaggi and Lau model
Q15. Who are considered external users of financial statements?
a) Managers
b) Shareholders
c) Employees
d) Suppliers
Q16. What options does an investor have in ULIPs?
a) Regular income during retirement
b) Medical coverage
c) Participation in capital market growth
d) Choice of riders
Q17. As per AS 5, which is considered an error?
a) Only 1 (change in depreciation method)
b) Only 2 (mathematical mistakes)
c) Only 3 (misinterpretation of facts)
d) Both 2 and 3
Q18. A 50-year-old person takes whole life policy. Till what age premium is payable?
a) Up to 85 years or death
b) Up to 80 years or death
c) Up to 80 years
d) Up to 75 years
Q19. What is the maximum tax-free medical reimbursement per year?
a) Rs. 3,000
b) Rs. 5,000
c) Rs. 10,000
d) Rs. 15,000
Q20. What is the effect on Balance Sheet if proprietor pays outstanding rent personally?
a) Both liabilities and assets unchanged
b) Liabilities increase, assets decrease
c) Assets increase, liabilities decrease
d) Both liabilities and assets decrease
