IC26 Mock Test Sample 5
These questions cover insurance accounting, finance, ratios, budgeting, and regulatory concepts. If deposit is less than premium, shortfall is collected from policyholder. Cash Flow Statement is governed by AS 3. A fall in Average First Premium per 1000 SA indicates product mix or policy changes. Printing cost ratio measures operational expenses per policy. KYC ensures customer identification and risk control. Cheque timing causes bank reconciliation differences. Straight-line method gives constant depreciation. TDS is recorded through TDS A/c. ALM focuses on balancing assets and liabilities. ULIPs have a 5-year lock-in. Debt-equity ratio measures long-term solvency, while extraordinary items are non-recurring in nature.
1. What happens if the deposit amount is less than the required premium?
a) Shortfall is collected from policyholder
b) Deposit is refunded
c) Excess credited to Short Remittance Account
d) Deposit transferred to Policy Deposit Account
e) Deposit is forfeited
2. Which accounting standard is used for Cash Flow Statement?
a) AS 1
b) AS 3
c) AS 17
d) AS 10
e) AS 5
3. Fall in Average First Premium per 1000 SA indicates:
a) Increase in efficiency
b) Change in product mix
c) Rise in quarterly policies
d) All of the above
e) None of the above
4. Ratio for printing & stationery per in-force policy is:
a) Medical fees ratio
b) Medical SA percentage
c) Printing & stationery cost per policy
d) Overall expense ratio
e) SSS ratio
5. Primary purpose of KYC process is:
a) Identify & verify customer
b) Monitor policy misuse
c) Develop customer relationship
d) Collect documents only
e) Determine true identity
6. Reason for disagreement in cash book vs pass book (cheques issued):
a) Cheques not credited
b) Cheques not presented
c) Bank charges
d) Direct credit
e) Standing orders
7. Method giving constant depreciation charge is:
a) Diminishing balance
b) Sum of years digit
c) Straight-line method
d) Annuity method
e) Sinking fund method
8. Entry for ICU hospitalization benefit payment is:
a) Outstanding claims (non-ICU)
b) Outstanding claims (ICU)
c) Repurchase unit capital ICU
d) Repurchase premium ICU
e) Repurchase for hospitalization
9. TDS on investment income is recorded as:
a) Credit TDS, debit income
b) Debit TDS, credit income
c) Credit TDS, debit bank
d) Debit TDS, credit bank
e) Credit income, debit TDS
10. Budget for R&D cost is:
a) Labour budget
b) R&D budget
c) Capital budget
d) Cash budget
e) Master budget
11. First Premium vs First Year Premium difference:
a) Monthly vs yearly
b) First installment vs total first year
c) Policyholder vs beneficiary
d) First month vs full year
e) Renewal vs new policy
12. Extraordinary items are:
a) Non-recurring ordinary items
b) Core business items
c) Prior period errors
d) Wages revision items
e) Prior period circumstances
13. Debt-Equity ratio focuses on:
a) Short-term solvency
b) Long-term solvency
c) Liquidity
d) Profitability
e) Asset turnover
14. Main goal of ALM is:
a) Remove all risks
b) Maximize short-term profit
c) Balance assets & liabilities
d) Minimize liquidity
e) Avoid interest risk
15. Service tax option for composite policies:
a) No tax
b) Reduced rate
c) Lump sum payment
d) Exempted
e) Higher rate
16. SYD method depreciation is calculated by:
a) Fixed percentage on cost
b) Interest lost method
c) Asset hours method
d) Logarithmic formula
e) Sum of digits formula
17. Balance sheet presentation of assets is:
a) Ease of cash conversion
b) Permanence order
c) Payment urgency
d) Liquidity order
e) Net book value order
18. ULIP lock-in period is:
a) 1 year
b) 3 years
c) 5 years
d) 7 years
e) 2 years
19. If fund value is higher in death claim, debit is:
a) Repurchase unit capital
b) Repurchase premium capital
c) Claim outstanding unit fund
d) Repurchase unit premium
e) Accidental death claim
20. Depreciation on residual balance method is:
a) Written down value method
b) Straight line method
c) Declining balance method
d) Both A and C
e) None
