Alagappa University 2007 M.Com Insurance Management ACCOUNTING FOR INSURANCE - Question Paper

DISTANCE EDUCATION
M.Com. DEGREE EXAMINATION, DECEMBER 2007.
Insurance Management
ACCOUNTING FOR INSURANCE
(Upto 2006 batch)
Time : 3 hours Maximum : 100 marks

part A — (5 ´ eight = 40 marks)
ans any 5 ques..

elaborate the various accounting conventions?
discuss the differences ranging from Trial Balance and Balance Sheet.
How is net liability of Life Insurance computed?
Distinguish ranging from Life Insurance and General Insurance.
discuss the procedure for computing claim for loss of profit.
elaborate the kinds of financial analysis?
discuss how accounting ratios are classified.
discuss how is surrender value calculated.

part B — (4 ´ 15 = 60 marks)
ans any 4 ques..

elaborate the advantages of Double Entry System?
elaborate the advantages of comparative statement analysis?
elaborate the limitations of Ratio Analysis?
Write short notes on :
(a)Consideration for annuity granted
(b)Annuity
(c)Surrender.
A fire occurred on 1.9.2003 in the godown of
Mr. Ganesan. From the subsequent particulars obtain out the claim to be lodged.

Rs.
Stock on 1.1.2003 25,300
Purchases from 1.1.2003 to date of fire 50,400
Sales from 1.1.2003 to date of fire 1,56,000
Manufacturing expenses and wages 60,000
Goods taken by Ganesan at cost 2,500
The rate of gross profit on cost is 30%
Value of salvaged stock 3,600
On 31st Dec. 2003, the books of Fire Insurance Co. Ltd. contained the subsequent info in respect of fire insurance business :

Rs.
Reserve for unexpired risk on 31.12.2002 1,00,000
Additional reserve on 31.12.2002 20,000
Claims paid (less reinsurance claims) 1,22,000
Estimated liability in respect of outstanding claim :
On 31.12.2002 13,000
On 31.12.2003 18,000
Expenses of management 50,000
Re-insurance premium paid 15,000
Re-insurance premium received 4,000
Interest and dividends received 10,900
Income tax deducted at source on the above 1,300
Profit on sale of investments 4,200
Commission 30,400
Premiums 2,24,000
Prepare fire insurance revenue account for the year 2003, reserving 50% of the premium income for unexpired risks and add a sum of Rs. 10,000 to additional reserve.
From the subsequent Trial Balance, prepare Trading, Profit and Loss a/c for the year ended 31.12.2003 and a Balance Sheet as on that date.
Trial Balance

Rs. Rs.
Purchases 11,870 Capital 8,000
Debtors 7,580 Bad debts recovered 250
Return inwards 450 Creditors 1,250
Bank deposit 2,750 Return outwards 350
Rent 360 Bank overdraft 1,570
Salaries 850 Sales 14,690
Travelling expenses 300 Bills payable 1,350
Cash 210
Stock 2,450
Discount allowed 40
Drawings 600
27,460 27,460
Adjustments :
(a) The closing stock on 31.12.2003 was Rs. 4,200.
(b) Write off Rs. 80 as bad debts and
(c) Create a reserve for bad debts at 5% on sundry debtors.
(d) Three months rent is outstanding.
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Earning:   Approval pending.