Exam (elaborations)
LOMA 361 QUESTIONS WITH CORRECT ANSWERS 2024
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Exam of 6 pages for the course LOMA at LOMA (LOMA 361)
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LOMA 361Accounts increased by debits - answer Assets
Expenses
(the DEA)
Accounts increased by credits - answer Liabilities
Owners' Equity
Revenues
Contingency Risks - answer C-1 = asset risk
C-2 = pricing risk
C-3 = interest-rate risk
C-4 = general management risk
(A PIG)
Difference in GAAP vs. Statutory accounting - answer GAAP lists cash first on
balance sheet.
GAAP uses "Retained Earnings" as a capital account.
GAAP allows expenses to be recognized over time (i.e. "Deferred Acquisition Costs").
GAAP requires an Annual Report.
GAAP allows "Prepaid Expenses" as short-term assets.
GAAP does not allow modification of actuarial assumptions for reserves.
GAAP reserves calculated with "realistic" mortality, interest and withdrawal rates (with
PADs).
GAAP reserves smaller.
GAAP includes PV of policyowner dividends in policy reserves.
GAAP accounts for interest and principal on short-term and long-term debt separately.
GAAP Capital and Surplus accounts = "Additional Paid-In Capital" and "Retained
Earnings"
GAAP considers "Surplus Notes" a liability account.
GAAP recognizes investment income on an accrual basis
Record of a purchase of an asset: - answer "Asset A".......$$$
"Cash" and/or "Accts Payable--Asset A".......$$$
Record of a sale of an asset: - answer "Cash" and/or "Accts Receivable--Asset
A"........$$$
, Asset A ............$$$
Record of a policyowner's use of a dividend to reduce a policy premium: - answer
"Policyowner Divdends Applied to Premiums".......$$$
"Premium Income" ..................$$$
Record of a cash surrender: - answer "Surrenders Paid"....$$$
Cash..............$$$
Record of wavier-of-premium rider use: - answer "Waiver-of-premium benefits".........
$$$
"Premium Income"...............$$$
Record of initial premium payment: - answer "Cash" ....................$$$
"Premium Suspense"..............$$$
Short-term Assets - answer Cash
Cash equivalents (T-bills)
Investment Income Due and Accrued
Deferred Premiums
Uncollected Premiums
Prepaid Expenses (NOT an admitted asset)
Admitted Assets - answer Cash
Cash equivalents
Real estate
Investment income due and accrued
Deferred premiums
Uncollected premiums
Nonadmitted Assets - answer Furniture
Prepaid expenses (for statutory accounting only)
Personal property
Producer balances due
Record of Nonforfeiture options - answer Cash Surrender: Debit "Surrenders Paid",
Credit "Cash"
Reduced Paid-Up or Extended Term Insurance (w/ outstanding dividends, loans and
interest): Debit "Surrenders Paid" and "Dividend Accumulations", Credit "Policy Loans"
and "Policy Loan Interest"
Reduced Paid-Up or Extended Term Insurance (w/out outstanding dividends, loans and
interest): no entry needed -- just change Master File from premium-paying to paid-up.
Operating Expenses - answer Taxes
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