Q 1.

Usually for the budget period, the time chosen is -

A period of 5 years
The accounting period of the company
Minimum 30 days
6 months
3 months

UnAttempted

CORRECT ANSWER:

The accounting period of the company

Explanation:

Usually the time chosen for the budget period is the accounting period of the
organization which usually is drawn for a year.

Q 2.
What does the individual replacement cost of cost based models for
human resource accounting refers to ?
It refers to the cost that would have to be incurred to replace an individual by
substitute who can provide the different set of services as that of the individual
being replaced
It refers to the cost that would have to be incurred to replace a group who can
provide the same set of services as that of the individual being replaced
It refers to the cost that would have to be incurred to replace a group by
substitute who can provide different set of services as that of the individual being
replaced
It refers to the cost that would have to be incurred to replace an individual by
substitute who can provide the same set of services as that of the individual
being replaced
It refers to the cost that would have to be incurred to replace a group by
substitute who can provide the same set of services as that of the individual
being replaced

UnAttempted

CORRECT ANSWER:
 It refers to the cost that would have to be incurred to replace an individual by
substitute who can provide the same set of services as that of the individual
being replaced

Explanation:

The individual replacement cost of cost based models for human resource
accounting refers to the cost that would have to be incurred to replace an
individual by substitute who can provide the same set of services as that of the
individual being replaced.

Q 3.
As per IRDA, an insurance company shall clearly segregate the functions
and operations of : 1. Front office 2. Mid office 3. Back office
1 and 2
2 and 3
1 and 3
1, 2 and 3
There is no need of segregation

UnAttempted

CORRECT ANSWER:

1, 2 and 3

Explanation:

As per IRDA mandate, the insurer shall clearly segregate the functions and
operations of front office and back office. This is to ensure proper internal
control of investment functions and operations.

Q 4.
Which is the most appropriate definition of tax ?
A levy charged by the Government on a product, income or activity
A levy charged by the Government only on products and activities
A levy charged by the Government only on income
 A levy charged by the Government only a product, income or activity
A levy charged by the Government only on an activity

UnAttempted

CORRECT ANSWER:

A levy charged by the Government on a product, income or activity

Explanation:

There are two types of tax i.e. Direct Tax & Indirect Tax. However the most
appropriate definition of tax being levy charged by the Government on a product,
income or activity.

Q 5.
What is the statement called when the 'total figure’ in a statement is equal
to 100% of each factor of percentage ?
Tallied statement
Complete sized statement
Horizontal statement
Common size statement
Zero sized statement

UnAttempted

CORRECT ANSWER:

Common size statement

Explanation:

When ‘total figure’ in a statement is equal to 100% of each factor of percentage,

such statement is called a Common Size Statement. Under this statement,
percentages are used in order to show the connection between different parts to
the total in a single statement.

Q 6.
With respect to accounting process, which of the below options will be
associated with ‘analyzing transactions’ ?
 Preparing trial balance
Collecting data source
Preparing balance sheet
Preparing primary books of account
Posting to ledger accounts

UnAttempted

CORRECT ANSWER:

Posting to ledger accounts

Explanation:

Accounting is the process of recording & reporting of financial transactions. Under

accounting process, posting to ledger accounts would be associated with ‘analyzing
transactions’.

Q 7.
_______ are objectives of budgetary control. 1. Forecasting the capital
expenditure of the company 2. Planning and control of income and
expenditure of a company 3. Planning and control the expenses related to
research & development
Only 1
Only 2
Both 1 and 2
Both 1 and 3
All 1, 2 and 3

UnAttempted

CORRECT ANSWER:

All 1, 2 and 3

Q 8.
The due date for filing quarterly statements of TDS through Form 24Q for
the quarter ending 30th September is _______ .
31st March
31st December
15th April
15th January
15th October
 UnAttempted

CORRECT ANSWER:

15th October

Explanation:

Timeline for filing quarterly statements of TDS through Form 24Q is 15th of the
next month.

Q 9.
How will this transaction affect the accounting equation - Mr. A borrowed a
sum of Rs 25000 from Mr. B for business purpose ?
Increase in asset and decrease in capital
Decrease in asset and decrease in liability
Decrease in asset and decrease in liability
Increase in asset and increase in liability
Increase in asset and decrease in liability

UnAttempted

CORRECT ANSWER:

Increase in asset and increase in liability

Explanation:

Increase in Asset and increase in Liability because the borrowed sum increases the
assets of the business and at the same time it increases the liability to the
extent of borrowings.

Q 10.
Which of the following is a Real Account ?
State Bank of India
LLyod Insurers
Capital
Cash
Drawings
 UnAttempted

CORRECT ANSWER:

Cash

Explanation:

There are three types of accounts i.e. Personal, Real and Nominal accounts.
Under real account, cash, bank balance and furniture & fixtures are considered.
Hence none of the above except cash is a real account.

Q 11.
Which of the below options show the assets arranged in correct
descending order of liquidity ?
Machinery, Goodwill, Cash in hand, Sundry debtors
Cash in hand, Sundry debtors, Machinery, Goodwill
Cash in hand, Sundry debtors, Goodwill, Machinery
Goodwill, Cash in hand, Sundry debtors, Machinery
Sundry debtors, Cash in hand, Machinery, Goodwill

UnAttempted

CORRECT ANSWER:

Cash in hand, Sundry debtors, Machinery, Goodwill

Explanation:

Assets can be presented in the balance sheet in the order of liquidity & in the
order of permanence. The descending order of liquidity would be: Cash in hand,
Sundry Debtors, Furniture and Goodwill. The liquidity refers to the degree of ease
with which they can be converted in to cash.

Q 12.
______ is NOT a feature of Salary Saving Scheme (SSS) premium. 1. The
instances of policy lapses are low as premiums are paid by the employer 2.
This scheme covers a large number of individuals as a group 3. In this
 scheme, the employee reminds the employer for deducting premium from
his salary every month, after which the employer can charge his salary
Only 1
Only 2
Only 3
Both 1 and 2
All 1, 2 and 3

UnAttempted

CORRECT ANSWER:

Only 3

Explanation:

Under Salary Saving Scheme (SSS), as the premiums are paid by employer,
chances of policy lapses are low & it covers a large number of individual as a
group. It is incorrect that employee has to remind the employer for deducting
premium from his salary every month, after which the employer can charge his
salary. It covers a large number of individual as a group.

Q 13.
With respect to 'Actuarial Valuation Liability' for life policies - which of the
following statement(s) is/are correct ? 1. The Actuarial valuation is to be
done every quarter 2. The estimation of liability against life policies shall
be determined by Appointed Actuary ie. Chief Actuary of the insurer 3. The
premium received by an insurer is to be considered as its income
Only 1
Only 2
Only 3
Both 1 and 2
Both 2 and 3

UnAttempted

CORRECT ANSWER:

Only 2

Explanation:
 Part I of the accounting principle for preparation of financial statements regarding
actuarial valuation liability for life policies requires that ‘The estimation of liability
against life policies shall be determined by Appointed Actuary (Chief Actuary) of
the insurer. Actuarial valuation is to be done every year. The premium received is
liabilities against policies.

Q 14.
Following are the important figures for Minta Ltd for the year ended 31 Dec
2017: Opening inventory – Rs 3,00,000 Purchases – Rs 10,00,000 Closing
inventory – Rs 1,00,000 The gross margin is 40%. Calculate the sales
revenue for the year.
Rs 2400000
Rs 1800000
Rs 2000000
Rs 2800000
Rs 3200000

UnAttempted

CORRECT ANSWER:

Rs 2000000

Explanation:

Cost of goods sold = Opening inventory + Purchases - Closing inventory

= 300000 + 1000000 - 100000 = 1200000

The gross margin is 40% of sales.

So : Sales Less 40% of sales = 1200000 (Cost of goods sold)

Let Sales be X

So (X - 0.4 X) = 1200000

0.6* X = 1200000 (* 1-.04 = 0.6)

X = 1200000 / 0.6 = 20,00,000

(Reverse check : 40% of 20,00,000 = 8,00,000 ie the profit

Sales - Profit = Cost of goods sold

20,00,000 - 8,00,000 = 12,00,000 which tallies)

Q 15.
As per which accounting principle is the depreciation expense charged
each year to the profit and loss account ?
Going concern
Matching
Relevance
Completeness
Consistency

UnAttempted

CORRECT ANSWER:

Matching

Explanation:

The matching principle requires that the expenses be recognised in the year in
which revenue is recognised. If the revenue from an asset is going to be earned
over a number of years then its cost should also be allocated over the same
number of years.

Q 16.
What will the nominee/legal heir get in case of death of the policy holder of
a unit linked policy when the cover is in full force ?
The nominee / legal heir will get the fund value of the unit held in policy
holder’s unit account as at the date of issuing the liability
The nominee / legal heir will get the fund value of the unit held in policy
holder’s unit account as at the date of booking the liability
The nominee / legal heir will get the sum assured under the policy
The nominee / legal heir will get the higher of sum assured or the fund value
of the unit held in policy holder’s unit account as at the date of booking the
liability
The nominee / legal heir will get the lower of sum assured or fund value of the
unit held in policy holder’s unit account as at the date of booking the liability

UnAttempted

CORRECT ANSWER:
 The nominee / legal heir will get the higher of sum assured or the fund value of
the unit held in policy holder’s unit account as at the date of booking the liability

Explanation:

Under a unit linked policy, in case of death of the policy holder when the cover is
in full force, the nominee/legal heir shall be eligible to get higher of sum assured
or the fund value of the unit held in policy holder’s unit account as at the date of
booking the liability.

Q 17.
Which of these errors cannot be highlighted while preparing a Trial
Balance ?
Posting
Casting
Commission
Wrong carry over to trail balance
Transposition

UnAttempted

CORRECT ANSWER:

Commission

Explanation:

Except ‘Commission’, all the above stated errors can be highlighted by preparing a
trial balance.

An error of Commission occurs when an incorrect value is recorded during

posting. For example, if purchase of goods for Rs. 10,000 is entered as Rs.1000
in the journal or in the ledger, such error is called errors of commission.

Q 18.
Which department helps to determine how much labour is needed to
produce one unit of output ?
HR department
Production department
 Sales department
Time and motion study department
Marketing department

UnAttempted

CORRECT ANSWER:

Time and motion study department

Explanation:

The time and motion study department helps to determine how much labour is
needed to produce one unit of output. It’s a part of work expense and labour
budget & contains various other expenses apart from labour like: Fixed, Variable &
Semi-variable expenses.

Q 19.
Everest Finance Ltd. had insured the business of Mr. Peter and got 50% of
his risk insured from ABC Ltd. In this case, ABC Ltd. is _______ .
Underwriter
Policy holder
Reinsurer
Direct Insurance Company
Insured

UnAttempted

CORRECT ANSWER:

Reinsurer

Explanation:

Everest Finance Ltd. in the example is a direct insurance company having insured
the business of Mr. Peter. As Everest Finance Ltd. has got 50% of his risk
insured from ABC Ltd., ABC Ltd. would be the reinsurers as reinsurance is
insurance of the insurers or transfer of risk from one insurance company to
another is called reinsurance.

Q 20.
 _______ is an agreement between two or more parties to exchange sets of
cash flows over a period in the future.
Arbitrage
Hedging
SWAPS
Future contract
Forward contract

UnAttempted

CORRECT ANSWER:

Forward contract

Explanation:

Agreement between two or more parties to exchange sets of cash flows over a
period in the future is known as forward contract. The contract specifies the
price & the quantity of an asset to be delivered in future.

(Future contracts are excected on an recognised exchange and the buyer and
sellers are not known to each other)

Q 21.
With respect to sound budgetory system which of the following is a must
requirement -
The objectives should be qualitative in description
A budget, once its finalised should not be changed
The period of the budget should not be quantifiable
The objectives to be achieved must be determined and should be in respect
of growth and profitability
Only the executive class should be consulted while making budget

UnAttempted

CORRECT ANSWER:

The objectives to be achieved must be determined and should be in respect of

growth and profitability

Explanation:

Budgetary control system is a means of monitoring revenue & cost to exercise

control in an entity. It does it by developing budgets & comparing figures. Certain
 important requirement includes: Objectives to be achieved must be determined and
should be in respect of growth and profitability.

Q 22.
The most apt way to define Asset Liability Management for an organization
means to have sufficient ________ against its ______ .
Long term assets, Short term liabilities
Short term assets, long term liabilities
Long term liabilities, long term assets
Short term liabilities, Long term assets
Long term assets, Long term liabilities

UnAttempted

CORRECT ANSWER:

Long term assets, Long term liabilities

Explanation:

Asset liability management (ALM) for an organization means to have sufficient

Long term assets, Long term liabilities. ALM is one of the most important
techniques of life insurers. Their contracts are long term in nature i.e. they have
long term liabilities. They must have therefore long term assets to pay out its
liabilities.

Q 23.
Determine which of the following are the type of benefits received under a
Whole Life Insurance plan -
Under a Whole Life Insurance plan, the insurance company makes specified
lump sum payments at specified time intervals during the plan to the life assured
Under a Whole Life Insurance plan, the insurance company pays a lump sum
amount on the death of the life assured or on maturity whichever is later during
the policy period
Under a Whole Life Insurance plan, the insurance company pays the life
assured the promised sum assured and the accumulated bonuses on the death
of the assured
Under a Whole Life Insurance plan, the insurance companies return back the
premiums to the life assured at the end of the tenure of the plan along with the
interest
Under a Whole Life Insurance plan, the insurance companies pay the life
assured the fund value on the maturity of the plan and the sum assured
 UnAttempted

CORRECT ANSWER:

Under a Whole Life Insurance plan, the insurance company pays a lump sum
amount on the death of the life assured or on maturity whichever is later during
the policy period

Explanation:

Whole life insurance policy which is guaranteed to remain in force for the
insured's entire lifetime, provided required premiums are paid, or to the maturity
date. The insured party normally pays premiums either until death, till the age of
80 yrs. or 35 annual premiums.

Q 24.
Given the case of an insurance company, if the company does not disclose
any matters which are not required to be disclosed by the Insurance Act
1938, still the financial statements of the company shall be treated as not
disclosing a true and fair view of the state of affairs of the company. Share
your opinion – select the most appropriate option.
The statement is completely correct
The statement is partially wrong
The statement is completely wrong
If an insurance company does not disclose any matters which are not required
to be disclosed by the Insurance Act 1938, the company shall be imposed with
penalty
As per section 129 of the Companies Act 2013, if an insurance company does
not disclose any matters which are not required to be disclosed by the Insurance
Act 1938, the financial statements of the company shall not be treated as not
disclosing a true and fair view of the state of affairs

UnAttempted

CORRECT ANSWER:

As per section 129 of the Companies Act 2013, if an insurance company does
not disclose any matters which are not required to be disclosed by the Insurance
Act 1938, the financial statements of the company shall not be treated as not
disclosing a true and fair view of the state of affairs

Explanation:
 In case of an insurance company, if the company does not disclose any matters
which are not required to be disclosed by the Insurance Act, 1938, still the
financial statements of the company shall be treated as not disclosing a true and
fair view of the state of affairs of the company, the financial statements shall
not be treated as not disclosing a true and fair view of the state of affairs of
the company.

Q 25.
From the options below, the most commonly used financial ratio in the life
insurance industry is - -
Interest cover
Quick ratio
Distribution yield
Fixed to worth
Cost of postage, telegram and M O commission per in-force policy

UnAttempted

CORRECT ANSWER:

Cost of postage, telegram and M O commission per in-force policy

Explanation:

The financial ratio that is used more often in the life insurance industry is cost of
postage, telegram and M O commission per in-force policy.

Q 26.
Among those listed the below, which is a direct expense of unit linked plan
?
Management fees
Incentive payment to other marketing officials
Training expenses
Receipt stamps
Repairs and maintenance

UnAttempted

CORRECT ANSWER:

Incentive payment to other marketing officials

 Explanation:

Expenses of management under ULIP are divided under two heads i.e. Direct
expenses & Indirect expenses. There are various direct expenses which are paid
incurred on unit linked insurance. One of the direct expenses includes incentive
payment to other marketing officials who help in procurement of business.

Q 27.
Which is true with respect to Term life insurance policies - 1. Provides
death benefit equal to the face amount of the policy if the insured dies
during the policy period 2. Provides death protection and varies with
interest rates 3. Provides death protection and savings accumulation
Only 1
Only 2
Only 3
Both 1 and 2
Both 2 and 3

UnAttempted

CORRECT ANSWER:

Only 1

Explanation:

Term life insurance polices do not have any saving element nor they vary with
interest rates. They provide a lumpsum amount (policy amount) only in case of
death during the policy period.

Q 28.
Which if the given formulae computes Net Value Added (NVA) ? (Where S=
Sales Revenue, B = Bought in cost of materials, Dep = Annual Depreciation
charges )
NVA = S + B + Dep
NVA = S - B + Dep
NVA = S - B - Dep
NVA = S + B
NVA = S + B - Dep

UnAttempted
 CORRECT ANSWER:

NVA = S - B - Dep

Explanation:

Net Value Added is defined as Gross Value Added less Deprecation.

Q 29.
Which books are used for reconciliation, classification and posting to
control accounts?
Reconciled Cash and Bank Book
IBNR book
Deposit adjustment book
Claims books
Daily entry journal

UnAttempted

CORRECT ANSWER:

Deposit adjustment book

Explanation:

Insurers have to maintain two types of books i.e. Statutory Books & Subsidiary
Books. Under subsidiary book, for reconciliation, classification and posting to
control accounts, Deposit Adjustment book is used by the insurers.

Q 30.
In ULIPs, where does a growth fund invests majority of its fund in ?
Gilt Securities
Derivatives
Equities
Tax saving funds
Mutual Funds

UnAttempted

CORRECT ANSWER:

Equities
Q 31.
With respect to annuity plans how much is the maximum lump sum
amount that can be withdrawn before the start of regular annuity payments
?
100% of the accumulated fund
1/2 of the accumulated fund
1/4th of the accumulated fund
1/3rd of the accumulated fund
2/3rd of the accumulated fund

UnAttempted

CORRECT ANSWER:

1/3rd of the accumulated fund

Explanation:

It is under unit linked pension plan that at the time of maturity, NAV of the
outstanding units are converted in to crops for the purchase of annuity for
payment can be made out of corps. However, 1/3rd of the accumulated fund can
be withdrawn before the start of regular annuity payments.

Q 32.
The amount which is payable at fixed periodic intervals is called ______ .
Premature redemptions
Survival benefits
Annuity payments
Maturity claims
Surrender value payments

UnAttempted

CORRECT ANSWER:

Survival benefits

Explanation:

Claims are policy benefits which are payable as per terms of the policy contract.
There are various mode of payment under life insurance policies & the survival
 benefit is payable at fixed periodic intervals under Anticipated Endowment
Assurance & Money Back Policies.

Q 33.
If a person buys a Single Premium whole life policy, it means he/she
________ .
makes a premium payment for a limited number of years and then receives a
pension in post that for whole life
makes the same premium payment each year
pays the entire premium in lump sum when the policy is issued and is covered
for his whole life
makes a premium payment for a limited number of years and is then covered
for his whole life
makes a premium payment each year for whole life and is then covered for
his whole life

UnAttempted

CORRECT ANSWER:

pays the entire premium in lump sum when the policy is issued and is covered
for his whole life

Explanation:

Whole life insurance plan with limited premium, include single premium insurance.
Under this option, the person pays the entire premium in lump sum when the policy
is issued and is covered for his whole life.

Q 34.
The Government charges a levy on a product, income or activity and this is
known as ________ .
GST
VAT
Cess
Tax
Commission

UnAttempted

CORRECT ANSWER:

Tax
 Explanation:

Tax has been defined as a levy charged by the Government on a product, income
or activity.

Q 35.
State your opinion : The AS15 Employee Benefits does not apply to those
retirement benefits for which the employer’s obligations cannot be
reasonably estimated.
Yes, agree
No, Disagree
It depends on the company's MOU and AOA
It depends on the type of retirement benefit obligation
It depends on the materiality of the obligation

UnAttempted

CORRECT ANSWER:

It depends on the type of retirement benefit obligation

Explanation:

AS 15 Employee Benefits does not apply to those retirement benefits for which
the employer’s obligations cannot be reasonably estimated would depend upon the
type of retirement benefit obligation.

Q 36.
In terms of valuation of investments of a life insurance company, _______
would be measured at fair value ?
Derivatives
Redeemable preference shares
Listed equity shares
Only 3
Both 1 and 3

UnAttempted

CORRECT ANSWER:

Both 1 and 3
 Explanation:

As per Part I of IRDAI (preparation of financial statements), valuation of

investments of a life insurance company in respect to Listed equity shares and
Derivatives, would be measured at fair value.

Q 37.
At _______ stage in money laundering the money is received from illegal
sources, usually in cash and is introduced into the financial system.
Placement
Conversion
Layering
Both Layering and Conversion
Integration

UnAttempted

CORRECT ANSWER:

Placement

Explanation:

Money laundering process can be broadly divided into three stages & under the
placement stage, the money received from illegal sources, usually in cash is
introduced into the financial system through purchase of art, jewellery or a series
of monitoring instruments like cheques, DD’s etc.

Q 38.
On what is the Production Budget dependent on - 1. Cash budget 2.
Purchase budget 3. Sale budget
Only 1
Only 2
Only 3
Both 1 and 2
Both 2 and 3

UnAttempted

CORRECT ANSWER:
 Both 2 and 3

Explanation:

The Production budget is prepared only after the sales budget. It specifies the
quantity needed for the production. The exercise is done keeping the required
units during the budget period. The most important aspect of this budget is the
inventories. There should not be any excess or shortfall in the inventories.

Q 39.
What of activity is - Cash payments made to and behalf of employees ?
Its a social activity
Its a financing activity
Its an investing activity
Its an operating activity
Its an ordinary activity

UnAttempted

CORRECT ANSWER:

Its a financing activity

Explanation:

Cash payment to the employees is a financing activity which is usually a short term
financing with a return option of with or without interest.

Q 40.
Mr. Singh aged 40, wishes to have an insurance that acts as a savings
scheme as well as gives financial protection to his family against his
premature death. Which plan will you recommend ?
Jeevan Anand
Endowment policy
Whole life policy
Term insurance policy
Money back policy

UnAttempted

CORRECT ANSWER:
 Endowment policy

Explanation:

Endowment policy gives an insurance cover that serves as a savings scheme as well
as gives financial protection. This would be the most ideal insurance that serves as
a savings scheme as well as gives financial protection to his family against his
premature death.

This plan is ideal for a person with family.

Q 41.
Which is the best way for a company to meet the foreign exchange
requirement for capital expenditure and revenue expenditure ?
Issue of Non Convertible Debentures
Private placement
IPO
G Sec
External commercial borrowing

UnAttempted

CORRECT ANSWER:

External commercial borrowing

Explanation:

To run a business, every enterprise requires money. To augment Foreign Exchange

Reserve and to meet foreign exchange requirement for capital expenditure and
revenue expenditure, External commercial borrowing is permitted. These are
generally dated for 3 to 5 years. Such deals are called swap deals.

Q 42.
Which is the financial ratio that is used more often in the life insurance
industry ?
Fixed to worth
Quick ratio
Percentage of renewal commission (individual) to Renewal Premium
(individual)
 Distribution yield
Interest cover

UnAttempted

CORRECT ANSWER:

Percentage of renewal commission (individual) to Renewal Premium (individual)

Explanation:

Ratios plays an important role in life insurance to help assessing performance,

whether wrong accounting is done & knowing the areas to probe further.
Percentage of renewal commission (individual) to Renewal Premium (individual) should
be around 5% & higher percentage indicates excess provision made in the current
year than the previous year.

Q 43.
Which model of human resource accounting capitalizes only training and
development costs which have been incurred and ignores the future
expected cost to be incurred for their maintenance .
Flamholtz Model
Lev and Schwartz Model
Hekimian and Jones model
Replacement Cost Model
Capitalization and historical cost Model

UnAttempted

CORRECT ANSWER:

Capitalization and historical cost Model

Explanation:

Capitalization and historical cost model of human resource accounting capitalizes

only training and development costs incurred and ignores the future expected cost
to be incurred for their maintenance. Generally this is not a favorable model with
the industry since it distorts the value of highly skilled human resources.

Q 44.
 Which Option would you generally use if you want to buy an asset ?
Arbitrage
Short
Call
Put
Hedge

UnAttempted

CORRECT ANSWER:

Call

Explanation:

A call option is an agreement that gives an investor the right, but not the
obligation, to buy a stock, bond, commodity or other instrument at a specified
price within a specified time period.

Q 45.
The two prime functions of Banks include _______ .
Opening branches , giving Loans
Investment, speculation
Deposit collection, investments
Giving loans, investment
Collecting deposit, giving loans

UnAttempted

CORRECT ANSWER:

Collecting deposit, giving loans

Explanation:

Banks primarily collect deposits through various accounts and deposits & give loans
to individuals & corporates for varied purposes. In addition, banks also sell third
party products like insurance & mutual funds.

Q 46.
The key feature(s) of moneyback policy include - 1. Only death benefits, no
cash benefits 2. There is no loan which can be granted in this policy 3.
 Loan can be taken against this policy
Only 1
Only 2
Only 3
Both 1 and 2
Both 2 and 3

UnAttempted

CORRECT ANSWER:

Only 2

Explanation:

The features of the money back policies are that no loan is granted under the plan
as the sum insured is paid in suitable installments. The lump sum benefits are paid
at periodic installments.

Q 47.
What is the document called which describes the terms of the contract of
the insurance ?
Memorandum of Understanding
Insurance
Policy
Insurable interest
Premium

UnAttempted

CORRECT ANSWER:

Policy

Explanation:

The document which lays down the terms of the contract of the insurance is called
the policy. It is issued on the basis of proposal form, premium paid by the
proposer which is accepted by the insurer & has been accepted by the proposer.

Q 48.
 The primary aim of Accounting is to – 1. Prepare the P/L account and the
Balance Sheet 2. Prepare Ledger accounts for all transactions 3. Provide
financial information to users of such information
Only 1
Only 2
Only 3
Both 1 and 2
Both 1 and 3

UnAttempted

CORRECT ANSWER:

Only 3

Explanation:

The main aim of accounting is to provide financial information to users of such

information. Other options i.e. To maintain ledger accounts for every transaction
and to prepare Balance Sheet etc. are the processes of accounting.

Q 49.
Which of these options is a direct expense of Unit Linked plans ?
Expenses on training of staff and agents
Policy expenses
Stamps used on Receipts
Fees paid to auditors
Repairs and maintenance

UnAttempted

CORRECT ANSWER:

Policy expenses

Explanation:

Expenses of management under ULIP are divided under two heads i.e. Direct
expenses & Indirect expenses. There are various direct expenses which are paid
incurred on unit linked insurance. Policy expenses are direct expenses which
includes policy stamps on policy bond.
Q 50.
The following budget has been estimated by Company ABC Ltd for an
activity level of 20,000 units - Material Rs 2000 Direct Labour Rs 8500 Fixed
expenses Rs 11000 Given the above facts what would be the total cost for
a level of activity of 30000 units ?
Rs. 32250
Rs. 26750
Rs. 23440
Rs. 41980
Rs. 37410

UnAttempted

CORRECT ANSWER:

Rs. 26750

Explanation:

Variable cost = Material + Labour = 2000 + 8500 = 10500 hence 1 unit variable
cost is 10500 / 20000 = .525

Variable Cost of 30000 units would be 30000 X .525 = 15750

Adding fixed expenses 11000 would be the total cost. 15750 + 11000 = 26750

Answer Rs. 26750 would be the total cost for a level of activity of 30000 units.

Out of 50 questions 50 are un attempted.