IC46 - General Insurance A_c Preparation Mock Test 06
This IC46 section covers fundamental accounting, insurance auditing, accounting standards, cash flow reporting, bonus shares, depreciation, underwriting, and reinsurance concepts. It explains the classification of personal accounts and the audit of government insurance companies. The questions also address accounting standard AS 15, which deals with employee benefits, and enterprise classification based on borrowing levels. Cash Flow Statements are discussed as a tool for assessing an entity’s ability to generate and utilize cash. Other important topics include sources of bonus shares, depreciation based on mineral extraction, firm underwriting, retention in direct insurance, and depreciation methods such as the straight-line and revaluation methods.
1. Personal accounts are of how many types?
A. One
B. Two
C. Three
D. Four
2. In case of a Government Insurance company, the accounts are audited by:
A. Statutory Auditors
B. Comptroller and Auditor General
C. Insurance and Regulatory Development Authority
D. None of the above
3. Under which level are all commercial, industrial and other business enterprises whose total borrowing, including public deposits during the previous year, are in excess of Rs. 10 crores?
A. Level I Enterprises
B. Level II Enterprises
C. Level III Enterprises
D. None of these
4. Which statement is useful in providing users of financial statements with a basis to assess the ability of the firm to generate cash and cash equivalent and the needs of the firms to utilise those cash flows?
A. Cash Flow Statement
B. Fund Flow Statement
C. Balance Statement
D. Trading Account Statement
5. Bonus shares can be issued from the following:
(i) General Reserves
(ii) Securities Premium realized in cash
(iii) Revaluation Reserves
A. Only (i)
B. Only (ii)
C. (ii) and (iii)
D. (i) and (ii)
6. Accounting Standard AS 15 deals with?
A. Accounting for Investments
B. Accounting for Amalgamation
C. Accounting for the Effects of Change in Foreign Exchange Rates
D. Employee Benefits
7. A mine was purchased for Rs. 3,00,000 and the estimated quantity of mineral in the mine is 10,000 tonnes. In the year 2010–11, a total of 1,700 tonnes of ore was mined. Depreciation for 2010–11 will be:
A. Rs. 3,00,000
B. Rs. 51,000
C. Rs. 10,000
D. None of the above
8. Which underwriting provides for definite commitment of the underwriters to accept a specified number of shares irrespective of the number of shares subscribed by the public?
A. Firm Underwriting
B. Partial Underwriting
C. Marked Underwriting
D. Complete Underwriting
9. The amount of retention of a Direct Insurer is also referred to as:
A. Cession
B. Retrocession
C. Line
D. None of the above
10. Identify the method of charging depreciation, under which the amount of depreciation charged every year remains constant.
(i) Reducing Balance Method
(ii) Revaluation Method
(iii) Straight Line Method
A. (i) and (ii)
B. (ii) and (iii)
C. (i) and (iii)
D. Only (iii)
