Reinsurance Accounting MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Reinsurance Accounting, a fundamental topic in the field of IC85 Reinsurance Management. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Reinsurance Accounting MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Reinsurance Accounting mcq questions that explore various aspects of Reinsurance Accounting problems. Each MCQ is crafted to challenge your understanding of Reinsurance Accounting principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC85 Reinsurance Management tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Reinsurance Accounting MCQs are your pathway to success in mastering this essential IC85 Reinsurance Management topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Reinsurance Accounting. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Reinsurance Accounting knowledge to the test? Let's get started with our carefully curated MCQs!

Reinsurance Accounting MCQs | Page 10 of 16

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Q91.
How do brokers settle balances due to reinsurers?

a.

They settle balances net of brokerage

b.

They include brokerage in the balances due

c.

They deduct brokerage from the ceding insurer's payments

d.

They send separate brokerage statements to the reinsurer

Discuss
Answer: (a).They settle balances net of brokerage Explanation:If balances are due to the reinsurer, brokers usually settle them net of brokerage.
Q92.
What is the purpose of an accounts flow chart in inward accounts management?

a.

To track the receipt of accounts and follow-up on delayed accounts

b.

To calculate the brokerage payable by the reinsurer

c.

To monitor the profitability of the reinsurance placements

d.

To summarize the outstanding claims for each quarter

Discuss
Answer: (a).To track the receipt of accounts and follow-up on delayed accounts Explanation:An accounts flow chart in inward accounts management helps in keeping track of the receipt of accounts and facilitates follow-up on delayed accounts.
Q93.
What is the purpose of maintaining a cash loss register in inward accounts management?

a.

To track cash loss payments made to the ceding insurer

b.

To monitor the profitability of the reinsurance placements

c.

To maintain a record of large losses and their settlement details

d.

To reconcile balances between the ceding insurer and reinsurer

Discuss
Answer: (c).To maintain a record of large losses and their settlement details Explanation:The cash loss register is maintained to keep a record of large losses and their settlement details, including the date of advice, brief particulars of the loss, estimated loss, paid amount, date of payment of cash loss, and the quarter in which credit is received.
Q94.
What is the purpose of the treaty journal in accounts management?

a.

To track the receipt of treaty statements

b.

To maintain a record of all treaties entered into by the reinsurer

c.

To reconcile balances between the reinsurer and retrocessionaires

d.

To record transactions and details related to specific treaty arrangements

Discuss
Answer: (d).To record transactions and details related to specific treaty arrangements Explanation:The treaty journal is used to record transactions and details related to specific treaty arrangements. It helps in tracking the activities and financial information associated with each treaty.
Q95.
What is the role of the reserves journal in accounts management?

a.

To track the payment of reserves to the ceding insurer

b.

To maintain a record of retrocession treaty accounts

c.

To reconcile the reserve balances between the reinsurer and ceding insurer

d.

To record the establishment and changes in reserves for reinsurance treaties

Discuss
Answer: (d).To record the establishment and changes in reserves for reinsurance treaties Explanation:The reserves journal is used to record the establishment and changes in reserves for reinsurance treaties. It helps in tracking and managing the reserve amounts associated with each treaty.
Q96.
What is the purpose of retrocession processing in accounts management?

a.

To calculate profit commissions for retrocessionaires

b.

To track retrocession treaty accounts and settlements

c.

To reconcile balances between the retrocessionaires and reinsurer

d.

To prepare final accounts for retrocession treaty arrangements

Discuss
Answer: (b).To track retrocession treaty accounts and settlements Explanation:Retrocession processing involves tracking retrocession treaty accounts and settlements. It ensures that the retrocessionaires receive the appropriate information and payments based on the retrocession arrangements.
Q97.
What is the role of the personal ledger in accounts management?

a.

To track the payment of premium by the ceding insurer

b.

To maintain a record of balances between the ceding insurer and reinsurer

c.

To reconcile the cash loss payments made by the reinsurer

d.

To record the profit commissions earned by the reinsurer

Discuss
Answer: (b).To maintain a record of balances between the ceding insurer and reinsurer Explanation:The personal ledger is used to maintain a record of balances between the ceding insurer and reinsurer. It helps in tracking and reconciling the financial positions between the two parties.
Q98.
What is the purpose of examining outstanding claims while closing annual accounts?

a.

To determine the profitability of the reinsurance treaties

b.

To estimate the provisions to be made in the revenue accounts

c.

To reconcile balances between the ceding insurer and reinsurer

d.

To track the settlement of claims made during the year

Discuss
Answer: (b).To estimate the provisions to be made in the revenue accounts Explanation:By examining outstanding claims, the insurer can make a reasonable estimate for provisions to be made in the revenue accounts while closing annual accounts. This helps in presenting a more accurate financial picture.
Q99.
Which legislation prescribes the format for preparing annual accounts in India?

a.

Insurance Act, 1938

b.

Insurance Rules under the Insurance Act, 1938

c.

Companies Act, 1956

d.

Income Tax Act, 1961

Discuss
Answer: (a).Insurance Act, 1938 Explanation:The format for preparing annual accounts in India is prescribed by the Insurance Act, 1938, along with the relevant rules and regulations under this act. It includes the preparation of balance sheets, profit and loss accounts, and revenue accounts for each class of insurance business.
Q100.
What is required as per the Insurance Act, 1938 in relation to annual accounts?

a.

Submission of audited accounts to the IRDA

b.

Disclosure of security level of reinsurers

c.

Preparation of profit and loss account for each treaty

d.

Maintenance of records of common and facultative reinsurance arrangements

Discuss
Answer: (a).Submission of audited accounts to the IRDA Explanation:As per the Insurance Act, 1938, every insurer is required to prepare, in the prescribed forms, a balance sheet, a profit and loss account, and revenue account for each class of insurance business. There is also a provision for the audit of annual accounts and the submission of specified copies to the IRDA.
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