IC26 Mock Test Sample 17
These questions cover important concepts in insurance, accounting, auditing, and financial management. They focus on product risk profiles, actuarial responsibilities, and treatment of bad debts and deposits. Key accounting principles like depreciation, accrued income, and “substance over form” are highlighted. Topics such as budgeting, ratio analysis, and ROCE explain performance evaluation and efficiency. Insurance-specific areas include ULIPs, gratuity schemes, and IRDA compliance standards. Risk-related concepts like money laundering stages and NPAs are also included. Overall, the set emphasizes accuracy in financial reporting, regulatory compliance, and effective financial decision-making in insurance and business environments.
1. Which of the following insurance products are considered vulnerable in terms of product profile?
a) Term life insurance policies
b) Whole life insurance policies
c) Single premium products and ULIPs
d) Endowment policies
2. Who determines the estimation of liability against life policies?
a) IRDA
b) Chief Actuary (Appointed Actuary)
c) CEO of the insurance company
d) CFO of the insurance company
3. When does an entry to record bad debts occur?
a) In the year when allowance for doubtful debts is created
b) In the year when a debt becomes doubtful
c) In the year when a debt actually becomes bad
d) In the year when a provision for doubtful debts is created
4. What happens if the excess deposit is more than Rs 10?
a) It is credited to Short Remittance Account
b) It is refunded to the policyholder
c) It is transferred to Policy Deposit Account
d) It is adjusted towards first premium
5. What is the purpose of classifying commission payments into first year, bonus, and renewal commission?
a) To identify expenses related to first year business
b) To calculate tax deductions
c) To determine agent license particulars
d) To prepare expense ratios
6. How is the fair value of listed equity securities and derivatives determined?
a) Highest of last quoted closing price
b) Average of last three quoted closing prices
c) Lowest of last quoted closing price
d) Highest of last quoted opening price
7. Which aspect of budgeting is emphasized in LIC’s branch offices?
a) Preparation of revenue budget
b) Planning and performance budgeting
c) Increase in profit through growth
d) Reduction of administration costs
8. How can ratios be useful for auditors?
a) Help assess performance
b) Minimize routine checking
c) Help present final results
d) All of the above
9. What is the process of separating proceeds from criminal activity through complex transactions?
a) Placement
b) Layering
c) Integration
d) Concealment
10. What are the effects of accrued income on profit and net assets?
a) Increase in income, decrease in net assets
b) Increase in income, increase in net assets
c) Decrease in income, increase in net assets
d) Decrease in income, decrease in net assets
11. What is the definition of "depreciable amount" (AS 6)?
a) Estimated residual value
b) Current market value
c) Original cost of asset
d) Carrying amount of asset
12. Which metric calculates average first premium per 1000 Sum Assured?
a) Average FYP per 1000 Sum Assured
b) Conservation Ratio
c) Average first premium per 1000 SA
d) Cost of postage per policy
13. Under which method is depreciation charged on WDV?
a) Diminishing balance method
b) Annuity method
c) Sum of years digit method
d) Sinking fund method
14. What scheme is used to fund gratuity liability?
a) Superannuation Scheme
b) Annuity Scheme
c) Provident Fund Scheme
d) Group Gratuity Scheme
15. When is an asset classified as NPA?
a) 30 days overdue
b) 60 days overdue
c) 90 days overdue
d) 180 days overdue
16. What is an advantage of budgetary control?
a) Encourages inefficiency
b) Increases wastage
c) Provides motivation for goals
d) Delays execution
17. What does ROCE measure?
a) Liquidity
b) Profitability
c) Operating efficiency
d) Short-term solvency
18. Which accounting standard must life insurers follow (IRDA)?
a) AS 1
b) AS 3
c) AS 17
d) AS 10
19. What does "Substance over Form" emphasize?
a) Real nature over legal form
b) Original cost recording
c) Separate recognition of items
d) Ownership determination
20. What is the term for assets exceeding liabilities?
a) Shareholders’ Fund
b) Reserves
c) Capital Surplus
d) Net Income
