IC46 - General Insurance A_c Preparation Mock Test 07
This IC46 section covers important areas of insurance audit, financial statements, company law, investments, accounting records, depreciation, and underwriting results. It introduces the Long Form Audit Report (LFAR) and identifies the relevant auditor responsible for preparing it. The Balance Sheet is discussed as a statement showing the financial position at year-end, while the Journal is identified as the book of original entry. Other topics include Schedule provisions, statutory requirements for insurance financial statements, valuation of current investments, and the definition of a Government Company under the Companies Act, 2013. The section also covers sinking fund calculations and insurance audit regulatory requirements.
1. Long Form Audit Report (LFAR) is prepared/submitted by:
A. A bank's concurrent auditor/s
B. RBI inspector/s
C. Statutory auditor/s
D. All of the above
2. __________ containing the closing balances of assets and liabilities at the close of the year shows the state of affairs at the end of the accounting year.
A. Trading Account
B. Balance Sheet
C. Revenue A/c
D. Profit and Loss Account
3. Section I of Schedule deals with:
A. Remuneration payable by companies having profits
B. Remuneration payable by companies having no profits
4. The financial statements prepared by the management must adhere to the provisions of:
i. The Companies Act, 2013
ii. The Insurance Laws (Amendment) Act 2015
iii. The IRDAI (Preparation of Financial Statements and Audit Report) Regulations 2002
iv. The applicable Accounting Standards passed by the ICAI
A. (i), (iii) and (iv)
B. (i), (ii) and (iii)
C. (ii), (iii) and (iv)
D. (i) to (iv)
5. Which of the following statements is correct about Current Investments?
Statement 1: Readily realisable and intended to be held for not more than one year.
Statement 2: Carried in the financial statements at lower of cost and fair value.
A. Statement 1 is correct
B. Statement 2 is correct
C. Both Statements 1 and 2 are correct
D. Both Statements 1 and 2 are wrong
6. The __________ is the book in which transactions are recorded for the first time. It is also known as the “Book of Original Record” or “Book of Primary Entry”.
A. Ledger
B. Journal
C. Trading Account
D. Balance Sheet
7. As per Sec. 2(45) of the Companies Act, 2013, a __________ is a company in which not less than 51% of the paid-up capital is held by the Central Government or State Government or by both of them jointly.
A. Public Company
B. Foreign Company
C. Private Company
D. Government Company
8. PQR Company Ltd. obtained a machine for Rs. 10,00,000 with its useful life of 8 years on 01.04.2006. Replacement was to be done after 8 years by setting up a Depreciation Fund. Interest rate is 6% p.a. Calculate annual investment/Sinking Fund.
A. Rs. 82,365
B. Rs. 96,368
C. Rs. 1,01,035
D. Rs. 1,21,369
9. Which of the following shows net underwriting result?
A. Revenue A/c
B. Income A/c
10. An auditor performing insurance audit is required to follow a set of regulatory requirements and the relevant provisions of which of the following?
i. The Insurance Laws (Amendment) Act 2015
ii. The provisions of the Companies Act on accounts and audit
iii. The Accounting Standards passed by the ICAI
A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iii)
D. (i), (ii) and (iii)
