Assume that you are a trainee accountant, and joined a Global insurance company. The actuaries explained to you about the life insurance company and also about the Valuation Balance Sheet is prepared once in every two years. He provided you with the information of AXA insurance Company and ZAP Insurance company.

The following information relates to AXA insurance Company amounts of balances of Life assurance funds for the previous year and current year respectively OMR 7,365,250 as of31st December 2019 and OMR 4,034,000 on31st December 2020 and the net liability as per actuary's valuation OMR 5,895,200, an interim bonus paid during the period OMR 156,230; Dividend still unpaid for the 31^st December 2020 was OMR 62,300 and Surplus brought forward from the period 2019 was OMR 198,300; Premiums collected for the current period OMR 263,250

Actuaries also told to prepare a valuation balance sheet with a reduction of 40% in of its net liability for the year-end of 31^st December 2020 whereas, there is no change in the Balance of Life Assurance Fund and other information related to the current year.

The following information relates to ZAP insurance Company amounts with amounts of balances of Life assurance funds for the current year and previous year respectively OMR 13,160,000 as of31st March 2019, OMR 10,160,000as of31st March 2018, and the net liability as per actuary's valuation OMR 11,160,000. The current period shows claims for the current period at OMR 245,000, an interim bonus paid during the period OMR 47,000; thedividend still unpaid for the 31st March 2019 was OMR 30,000. Surplus to carry forward the next period OMR 283,000.

Actuaries also told you that the company is planning to create a reserve of 20% of its available Life Assurance fund at the end of 31^st March 2019 whereas there is no change in net liability and other information related to the current year.

Question 21

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Surplus earned for the given period is calculated by adjusting

a.

Adding surplus from previous year

b.

Adding the outstanding expenses

c.

Deducting interim bonus

d.

Deducting surplus to be carried forward

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Question 22

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Which of the following statements is correct with the effect of changes of surplus earned for 2020 after the reduction in net liability for AXA insurance company.

a.

It will result in surplus

b.

Deficit will increase

c.

Net liability will not have any effect

d.

Life Insurance fund will have any effect

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Question 23

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Calculate the Surplus/Deficit for AXA Insurance Company as at 31st December 2020.

a.

Surplus RO 1,861,200

b.

Surplus RO 1,470,050

c.

Deficit RO 1,861,200

d.

Deficit RO 1,470,050

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Question 24

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Find the Deficit/Surplus earned by AXA insurance company for the period ending 31st December 2020.

a.

RO (1775,280)

b.

RO 2,166,430

c.

RO 1,164,730

d.

RO (2,166,430)

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Question 25

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Calculate the Surplus/Deficit for ZAP Insurance Company as at 31st March 2019

a.

Surplus RO 2,000,000

b.

Surplus RO 1,000,000

c.

Deficit RO 1,000,000

d.

Deficit RO 2,000,000