IC46 - General Insurance A_c Preparation Mock Test 11

1. Capital, drawings and individuals are examples of which account?

A. Personal accounts
B. Nominal accounts
C. Real accounts
D. None of these

2. Which of the following is a key component in the preparation of financial statements for general insurance companies?

A. Claims Incurred but Not Reported (IBNR)
B. Commission on Gross Premium
C. Reinsurance Accepted
D. Reserve for Unexpired Risk
E. Depreciation on Office Equipment

3. Which of the following concepts states that a business entity will not be closed down in the near future?

A. Money Measurement Concept
B. Going Concern Concept
C. Accounting Cost Concept
D. Realization Concept

4. Investment income, Rent and Commission are examples of which account?

A. Personal accounts
B. Nominal accounts
C. Real accounts
D. None of these

5. Records of individuals' ledger accounts are kept in a book called Ledger. Say whether True or False.

A. True
B. False

6. What gives rise to an item of asset usually enhancing earning capacity?

A. Capital expenditure
B. Capital receipt
C. Revenue expenditure
D. Revenue receipt

7. What is referred to as a condition or situation, the ultimate outcome of which, gain or loss, will be known or determined only on the occurrence or non-occurrence of one or more uncertain and anticipated future events?

A. Contingencies
B. Balance Sheet
C. Disclosure
D. Depreciation

8. Following is one of the fundamental accounting assumptions as per Accounting Standard-I.

A. Prudence
B. Substance over form
C. Materiality
D. Consistency

9. Which is one based on many similar and equivalent risks, balancing of portfolio losses collectively and distributing proportionately as per terms of treaty?

A. Reinsurance accounting
B. Management accounting
C. Unbalanced portfolio
D. Balanced portfolio

10. Based on the above data, compute the following accounting ratios for the analysis of financial statements vis-à-vis performance analysis for 2005-06 of ABC General Insurance Company. Calculate the Operating Profit Ratio using the following data:

Operating Profit: ₹12,00,000
Net Premium Earned: ₹60,00,000

A. 30%
B. 20%
C. 10%
D. 15%
E. 35%