IC46 - General Insurance A_c Preparation Mock Test 02
This IC46 section focuses on fundamental accounting concepts, books of accounts, insurance claims, auditing, and financial reporting. It covers the accounting period concept, final books of accounts, and calculation of net claims incurred for a general insurance company. Important audit procedures and accounting principles such as dual aspect, accrual, matching, and conservatism are also discussed. Bank Reconciliation Statements are examined, including their purpose and role in identifying discrepancies. The questions also cover actuarial or technical valuation of insurance liabilities, preparation of the trial balance, single-entry accounting, and the classification of leases under AS 19 into finance and operating leases.
1. Which accounting concept is used for the following example — Goods bought and sold during a particular period and rent, commissions, salaries etc. incurred and paid for that period are accounted for in that period only?
A. Double entry concept
B. Accounting period concept
C. Duality aspect concept
D. Money measurement concept
E. Consistency concept
2. __________ is not an example of a final book of account.
A. Claims paid account
B. General ledger for premium account
C. Bank account
D. Cheque dishonor register
E. Commission account
3. The fire department of LLQ General Insurance Co. Ltd. gives the following details for 2016–17:
- Fire claims paid — Rs. 100 crore
- Claims on Reinsurance accepted — Rs. 25 crore
- Claims on Reinsurance ceded — Rs. 38 crore
- Claims outstanding as on 1/4/2016 — Rs. 112 crore
- Claims outstanding as on 31/3/2017 — Rs. 120 crore
What will be the claims incurred Net which has been shown in the Revenue Account for the year ended 31st March 2017?
A. Rs. 68 crores
B. Rs. 72 crores
C. Rs. 85 crores
D. Rs. 95 crores
E. Rs. 105 crores
4. Which of the following options has inappropriate audit procedures?
A. Preparation of the financial statements
B. Performs tests to get evidence of individual debits and credits
C. Examination of the financial statements as per various auditing assurance standards
D. Both 1 and 2
E. All 1, 2 and 3
5. Which of these statements are INCORRECT?
- In accounting, all the business transactions are recorded based on the concept of dual aspect.
- Accrual concept implies accounting on cash basis.
- Revenues are matched with the expenses in accordance with the matching principle.
- In accordance with the principle of conservatism, the accountant should provide for all possible losses, but should not provide for anticipated income.
A. All of the above
B. Only 1 and 2
C. Only 3 and 4
D. Only 2 and 3
E. None of the above
6. Choose the correct statement(s) with respect to Bank Reconciliation Statement.
- Bank Reconciliation Statement is not a part of double entry system.
- Bank Reconciliation Statement is prepared by the entity to find discrepancies.
- Bank Reconciliation Statement is a statement sent by a bank to those customers who do not maintain a minimum balance.
A. Only 1
B. Only 2
C. Only 3
D. Both 1 and 2
E. All 1, 2 and 3
7. Regarding appropriate valuation of liabilities of a General Insurance company, the branch auditor has to check whether necessary changes based on actuarial or technical evaluation have been made to the liability for contracts exceeding __________.
A. 1 year
B. 2 years
C. 3 years
D. 4 years
E. 5 years
8. When is the Trial Balance prepared?
A. After recording transaction in journal
B. After preparation of Profit and Loss Account
C. After posting journal entries
D. After balancing ledger
E. After preparation of Balance Sheet
9. In __________ system of accounting only one aspect of the transaction is recorded.
A. Poly entry system
B. Bank entry system
C. Double entry system
D. Single entry system
E. Both 1 and 4
10. As per AS 19 Accounting for Lease, which are the two broad classifications of leases?
- Capital lease
- Investment lease
- Finance lease
- Operating lease
A. 1 and 2
B. 2 and 3
C. 3 and 4
D. 1 and 4
E. 2 and 4
