IC46 GENERAL INSURANCE ACCOUNTS PREPARATION - 24
| Q1.Which book records cash transactions as well as transactions relating to the bank? |
| a) Double column cash book |
| b) Simple Cashbook |
| c) Triple column cash book |
| d) None of these |
| Q2.The agreement that requires reinsurance beyond the retention limit of the primary insurer is called _____. |
| a) Quota share |
| b) Surplus reinsurance |
| c) Facultative reinsurance |
| d) Treaty reinsurance |
| Q3.The loss ratio is usually calculated as the percentage that incurred losses bear to earned premiums, as which of the following formula? |
| a) Incurred Losses + Earned Premiums * 100 |
| b) Incurred Losses - Earned Premiums * 100 |
| c) Incurred Losses * Earned Premiums * 100 |
| d) Incurred Losses / Earned Premiums * 100 |
| Q4.Sanjay bought a machine for Rs.18,750. He paid for the new machine by taking out a loan of Rs.14,000 and trading in his old machine. The old machine originally cost Rs.10,500 and had been depreciated by Rs.6,148 at the time of the trade-in. What is the gain on disposal of the old machine? |
| a) Rs.398 |
| b) Rs.102 |
| c) Rs.648 |
| d) Rs.500 |
| Q5.It is a lease that is cancellable only: |
| a) upon the occurrence of some remote contingency |
| b) with the permission of the lessor |
| c) If the lessee enters into a new lease for the same or an equivalent asset with the same lessor |
| d) All of the above |
| Q6.When this item generally appears in the Trial Balance, it represents the amount not paid by the shareholders on the calls made by the company on shares and this needs adjustment to be shown in the Balance sheet? |
| a) Unclaimed Dividend |
| b) Interim Dividend |
| c) Calls in - Arrear |
| d) Proposed Dividend |
| Q7.There are no formal standards set on the reporting systems for the internal audit function. Say whether True or False. |
| a) True |
| b) False |
| Q8.____ is used for preparing cash flow statements of an insurance company. |
| a) Percentage of completion method |
| b) Historical cost method |
| c) Direct method |
| d) Indirect method |
| Q9.A contra entry in the cashbook would include: |
| a) Totalling up the bank and cash columns at the end of each month |
| b) Transferring the discounts to the accounts in the general ledger |
| c) Transferring cash into the petty cash box |
| d) Withdrawing cash from the bank account |
| Q10.The amount of liability the ceding company(primary insurer) keeps for its account on risk is known as: |
| a) Retention |
| b) Cession |
| c) Retrocession |
| d) None of the above |