Question 1

Which of the following is within the scope of AASB 1023 General Insurance Contracts?

Accepted Answer

A)  fixed fee service contracts 
B)  life insurance contracts 
C)  weather derivatives 
D)  product warranties 
A)  fixed fee service contracts 
B)  life insurance contracts 
C)  weather derivatives 
D)  product warranties

Question 2

In the situation that at year end an insurer is aware that there has been flooding in an area in which it has insured policy holders against flooding,the insurer should estimate the probable claims and treat them as an expense of the current period even though the claims have not yet been made.

Accepted Answer

A) True 
 B)False

Question 3

There have been numerous criticisms of AASB 1023 since it became operative in 1992.The criticisms have mainly come from:

Accepted Answer

A)  policy holders. 
B)  government policy advisers. 
C)  general insurers. 
D)  professional accounting bodies. 
A)  policy holders. 
B)  government policy advisers. 
C)  general insurers. 
D)  professional accounting bodies.

Question 4

In accordance with AASB 1023,what types of expected future payments in relation to insurance claims are required to be disclosed in the statement of financial position?
 Explain how each type is measured.

Accepted Answer

In accordance with AASB 1023, the types

Question 5

You are an accountant for Chance Insurance Ltd and are asked to assess the adequacy of unearned premium liability.You are able to access the following information:
I.present value of expected future cash flows relating to future claims based on current insurance contracts
II.unearned premium liability (before liability adequacy test)
III.risk margin
IV.related deferred acquisition cost
V.related intangible assets
Which of the following combinations best fits the liability adequacy test as prescribed in AASB 1023?

Accepted Answer

A)  (I+III) - II 
B)  (I+III) - (II - IV - V) 
C)  (I-III) - II 
D)  (I+III) - (II+IV+V) 
A)  (I+III) - II 
B)  (I+III) - (II - IV - V) 
C)  (I-III) - II 
D)  (I+III) - (II+IV+V)

Question 6

An unearned premium liability is:

Accepted Answer

A)  a premium that has been recognised previously in the statement of comprehensive income but not yet claimed against. 
B)  to meet costs, including the claims handling costs. 
C)  required to be recognised in the statement of financial position. 
D)  to meet costs, including the claims handling costs and required to be recognised in the statement of financial position. 
A)  a premium that has been recognised previously in the statement of comprehensive income but not yet claimed against. 
B)  to meet costs, including the claims handling costs. 
C)  required to be recognised in the statement of financial position. 
D)  to meet costs, including the claims handling costs and required to be recognised in the statement of financial position.

Question 7

AASB 1023 General Insurance Contracts requires premium revenue to be recognised in the statement of comprehensive income from attachment date using which basis?

Accepted Answer

A)  straight-line basis over the duration of the insurance contract 
B)  consistent with the use of economic benefits 
C)  systematic basis consistent with the pattern of the incidence of risk 
D)  on expiry date of the insurance contract 
A)  straight-line basis over the duration of the insurance contract 
B)  consistent with the use of economic benefits 
C)  systematic basis consistent with the pattern of the incidence of risk 
D)  on expiry date of the insurance contract

Question 8

Part of the insurance premium is a charge levied by government on the insured party.These amounts are to be treated as a liability by the insurer.

Accepted Answer

A) True 
 B)False

Question 9

Unclosed business is defined as business written close to the reporting date for which the date of attachment of the risk is before the end of the reporting date.

Accepted Answer

A) True 
 B)False

Question 10

Discuss 'expected future payments' as referred to in AASB 1023 General Insurance Contracts.

Accepted Answer

AASB 1023 General Insurance Contracts de

Question 11

AASB 1023 General Insurance Contracts states that the pattern of the incidence of risk for many direct insurance contracts will be:

Accepted Answer

A)  straight-line basis over the duration of the insurance contract. 
B)  consistent with the business cycle. 
C)  driven by economic forces. 
D)  reduced over the life of the contract. 
A)  straight-line basis over the duration of the insurance contract. 
B)  consistent with the business cycle. 
C)  driven by economic forces. 
D)  reduced over the life of the contract.

Question 12

Payments made on claims should be:

Accepted Answer

A)  always treated as an expense for the period in which the payment is made. 
B)  only treated as an expense in the period if the claim is also settled in that period. 
C)  used to reduce the liability for claims settled in previous periods. 
D)  only treated as an expense in the period if the claim is also settled in that period and used to reduce the liability for claims settled in previous periods. 
A)  always treated as an expense for the period in which the payment is made. 
B)  only treated as an expense in the period if the claim is also settled in that period. 
C)  used to reduce the liability for claims settled in previous periods. 
D)  only treated as an expense in the period if the claim is also settled in that period and used to reduce the liability for claims settled in previous periods.

Question 13

Which of the following are considered income arising from insurance contracts?

Accepted Answer

A)  direct premium revenue 
B)  inward reinsurance premium revenue 
C)  unearned premium revenue 
D)  direct premium revenue and inward reinsurance premium revenue 
A)  direct premium revenue 
B)  inward reinsurance premium revenue 
C)  unearned premium revenue 
D)  direct premium revenue and inward reinsurance premium revenue

Exam 21: Accounting for General Insurance Contracts

Which of the following is within the scope of AASB 1023 General Insurance Contracts?

In the situation that at year end an insurer is aware that there has been flooding in an area in which it has insured policy holders against flooding,the insurer should estimate the probable claims and treat them as an expense of the current period even though the claims have not yet been made.

There have been numerous criticisms of AASB 1023 since it became operative in 1992.The criticisms have mainly come from:

In accordance with AASB 1023,what types of expected future payments in relation to insurance claims are required to be disclosed in the statement of financial position? Explain how each type is measured.

An unearned premium liability is:

AASB 1023 General Insurance Contracts requires premium revenue to be recognised in the statement of comprehensive income from attachment date using which basis?

Part of the insurance premium is a charge levied by government on the insured party.These amounts are to be treated as a liability by the insurer.

Unclosed business is defined as business written close to the reporting date for which the date of attachment of the risk is before the end of the reporting date.

Discuss 'expected future payments' as referred to in AASB 1023 General Insurance Contracts.

AASB 1023 General Insurance Contracts states that the pattern of the incidence of risk for many direct insurance contracts will be:

Payments made on claims should be:

Which of the following are considered income arising from insurance contracts?

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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