Skip to content

CMA Intermediate · Corporate Accounting and Auditing · Accounts of Banking, Electricity and Insurance Companies

Which statement about Section 11 of the Insurance Act, 1938 is correct?

Section 11(1) requires every insurer to prepare accounts in respect of the insurance business it transacts and its shareholders' funds. It does not allow pooling of funds or exempt the revenue account, and it applies to every insurer.

  1. AIt requires accounts for the insurer's insurance business and for its shareholders' fundsCorrect
  2. BIt permits shareholders' and policyholders' funds to be pooled in one account
  3. CIt applies only to life insurers
  4. DIt exempts insurers from preparing a revenue account

Explanation

Section 11(1) covers insurance business transacted and the insurer's shareholders' funds, and it requires a revenue account. Sub-section (2) requires separate accounts for shareholders and policyholders, so pooling is not permitted.

Did you get it right without looking?

One question tells you little. A timed set on Accounts of Banking, Electricity and Insurance Companies shows your real accuracy, how long you take and where you lose marks.

Practise Accounts of Banking, Electricity and Insurance CompaniesFree diagnostic mock

More Accounts of Banking, Electricity and Insurance Companies questions