Question 1

The organizations in which the ownership and control of operations are vested in the policyholders are known as:

Accepted Answer

A)  Private entities 
B)  Public entities 
C)  Reciprocal entities 
D)  Mutual entities

Question 2

GAAP have two important functions. First, they provide a set of standards that endeavor to measure with reasonable accuracy the assets held, liabilities owed, revenue earned, and expenses incurred by the company. For life insurance companies these measurement rules have been prescribed specifically for their specialized products. The second important function of GAAP is:

Accepted Answer

A)  To ensure the comparability of financial data from year to year within each company and with similar data prepared by other companies 
B)  To ensure the comparability of financial data 
C)  To ensure the comparability of financial data from month to month within each company and with similar data prepared by other companies 
D)  To ensure the comparability of financial data from quarter to quarter within each company and with similar data prepared by other companies

Question 3

The financial statements of which accounts maintained by insurance company that must be presented separately from the insurance company's general account business?

Accepted Answer

A)  Business 
B)  Temporal 
C)  Principal 
D)  Segregated

Question 4

The difference between the carrying value of the parent's investment in subsidiary and the amount received is treated as a gain or loss in the:

Accepted Answer

A)  parent's income statement 
B)  subsidiary's revenue statement 
C)  parent's financial statement 
D)  subsidiary's income statement

Question 5

What represent legal agreements between buyers or sellers and represent commitments to buy or sell financial instruments at specified dates and prices?

Accepted Answer

A)  Future contracts 
B)  Present contracts 
C)  Accounting contracts 
D)  Financial contracts

Question 6

A package of coverage including most property and liability coverage except workers' compensation, automobile insurance and surely bonds is called:

Accepted Answer

A)  Single peril 
B)  Multiple peril 
C)  Property lines 
D)  professional property

Question 7

Sales of securities are recorded as of the trade date. A receivable due from the broker is established in instances when a security has been sold, but the proceeds from the sale have not been received. Receivable for securities not received within settlement date are non-admitted, and are classified as other than invested assets.

Accepted Answer

A)  15 days 
B)  30 days 
C)  35 days 
D)  90 days

Question 8

To realize the effect on the "bottom line," or the net gain from operations, from various transactions, one must consider the amount of any liabilities that are released because of the transaction. Assume a death claim entry as follows: Death proceeds-ordinary $10,000 Dividends on deposit disbursed 1,000 Cash $11,000 On first appearance, one might think that this will cause the net gain from operations to be $11,000 lower. However, if the policy has a reserve of $3,000, the effect on the net gain is only , because the reserve liability of $3,000 and the dividend liability of $1,000 will no longer be shown on the balance sheet

Accepted Answer

A)  $7,000 
B)  $10,000 
C)  $8,000 
D)  $9,000

Question 9

Which of the following is NOT the date that is the key to classify the chronology of the data?

Accepted Answer

A)  policy date 
B)  accident date 
C)  reinsurance date 
D)  report date

Question 10

To avoid double counting or omitting the effects of risks factors what should reflect assumptions that are consistent with those inherent in the cash flows?

Accepted Answer

A)  Economic flow 
B)  Nominal flows 
C)  Discount rates 
D)  Inflation effect

Question 11

Policy loan:

Accepted Answer

A)  On policies are valuable to the policyholders, and insurers encourage them to protect this feature by saving it for emergency use 
B)  Interest rate is raised to eight percent 
C)  Interest rate was raised to eight percent, and later variable rates were approved 
D)  Do not have variable principal payments or a maturity

Question 12

The reason behind, when an insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of its statutory financial statements, may include:

Accepted Answer

A)  the entity wishes to depart from Statutory Accounting Practices (SAP) 
B)  the prescribes SAP address the accounting for transaction 
C)  Both A & B 
D)  Neither A nor B

Question 13

The evaluation and subsequent purchase or sale of investments is based on the judgment of the entity's investment and finance committees.

Accepted Answer

A) True 
 B)False

Question 14

What limits the repurchase price to a stipulated percentage of the face amount of the certificate?

Accepted Answer

A)  Price-cap provision 
B)  Investment provision 
C)  Limit provision 
D)  Par cap provision

Question 15

Many companies have developed an asset/liability management approach that is founded on understanding product liabilities. Mortgages meet the primary objective of maintaining:

Accepted Answer

A)  A tight asset/liability match 
B)  A well-diversified core of investments 
C)  A tight asset/liability match with a well-diversified core of investments. 
D)  Real estate lending by insurance companies

Question 16

At the end of each reporting period, unearned premiums are calculated and the change in unearned premiums is recorded as a change or debit to premium income.

Accepted Answer

A) True 
 B)False

Question 17

Principal objectives of state statutes are: to investigate and settle some or all of the

Accepted Answer

A)  restrict investments of insurance entities 
B)  prescribe methods of admitted asset recovery 
C)  acquisition of risk-based capitals 
D)  Both B & C

Question 18

Changes in payment procedures or changes in the definition of payment date for coding purposes may or may not affect loss reserve developments.

Accepted Answer

A) True 
 B)False

Question 19

Special surplus funds are portions of surplus allocated or appropriated for a specific purpose. Special surplus funds usually are allocated voluntarily but also may be required by an insurance regulator. Which one the following is NOT an example of special funds:

Accepted Answer

A)  Group contingency reserve 
B)  Group annuity contingency reserve 
C)  Participation is separate accounts 
D)  Guarantee Loan

Question 20

What are batched, and input control totals are established before delivery to data entry?

Accepted Answer

A)  Coded applications 
B)  Billing premiums 
C)  Issuing policies 
D)  Business applications

Exam 1: Accredited Financial Examiner

The organizations in which the ownership and control of operations are vested in the policyholders are known as:

The financial statements of which accounts maintained by insurance company that must be presented separately from the insurance company's general account business?

The difference between the carrying value of the parent's investment in subsidiary and the amount received is treated as a gain or loss in the:

What represent legal agreements between buyers or sellers and represent commitments to buy or sell financial instruments at specified dates and prices?

A package of coverage including most property and liability coverage except workers' compensation, automobile insurance and surely bonds is called:

Which of the following is NOT the date that is the key to classify the chronology of the data?

To avoid double counting or omitting the effects of risks factors what should reflect assumptions that are consistent with those inherent in the cash flows?

Policy loan:

The reason behind, when an insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of its statutory financial statements, may include:

The evaluation and subsequent purchase or sale of investments is based on the judgment of the entity's investment and finance committees.

What limits the repurchase price to a stipulated percentage of the face amount of the certificate?

Many companies have developed an asset/liability management approach that is founded on understanding product liabilities. Mortgages meet the primary objective of maintaining:

At the end of each reporting period, unearned premiums are calculated and the change in unearned premiums is recorded as a change or debit to premium income.

Principal objectives of state statutes are: to investigate and settle some or all of the

Changes in payment procedures or changes in the definition of payment date for coding purposes may or may not affect loss reserve developments.

Special surplus funds are portions of surplus allocated or appropriated for a specific purpose. Special surplus funds usually are allocated voluntarily but also may be required by an insurance regulator. Which one the following is NOT an example of special funds:

What are batched, and input control totals are established before delivery to data entry?