CAS Online Course 2 Actual Questions With Correct Detailed Answers A+ Score
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Course
CAS.
Institution
CAS.
GAAP - correct answer A common set of accounting standards and procedures used in the preparation of financial statements to ensure consistency of presentation and reported results.
SAP - correct answer The accounting principles and practices that are prescribed or permitted by an insu...
GAAP - correct answer A common set of accounting standards and procedures used in the
preparation of financial statements to ensure consistency of presentation and reported results.
SAP - correct answer The accounting principles and practices that are prescribed or permitted by an
insurer's domiciliary state and that insurers must follow.
FASB - correct answer Which organization is considered to be top of the hierachy in the US, though it
is subject to veto
Mark-to-Model - correct answer The valuation of an asset based on financial models instead of
market price.
Mark-to-Market - correct answer The value of an asset or liability based on its current market price.
Deferral-Matching - correct answer An accounting approach in which the focus is to coordinate the
timing of income and expense recognition so that both occur when the triggering event that is the focus
of the contract occurs.
Accounts Recievable - correct answer A current asset representing monies owed to a business by
customers for goods or services rendered.
Net Worth formula - correct answer Assets - Liabilities
Balance Sheet - correct answer can be thought of as showing the sources and uses of an
organization's funds.
typical insurer liabilities - correct answer obligations arising from the insurance contracts.
,Third-party liabilities - correct answer represent amounts owed by the insurer on behalf of
policyholders (e.g. CGL)
first-party liabilities - correct answer represent amounts owed by the insurer to policyholders (e.g.
APD)
Deferred acquisition costs (DAC) - correct answer The recognition of the cost of acquiring a new
customer over the duration of an insurance contract.
Types of Insurer liabilities - correct answer claim liabilities (reserves) and unearned premium
insurance expense - correct answer This is the liability for expenses incurred but unpaid in
conjunction with the insurance policy, other than the claim expenses previously discussed. Typical
expenses include commission liabilities (sometimes split into regular and contingent commission
liabilities) and premium tax liabilities (where applicable).
Net Income formula - correct answer revenue - expenses
Notes and Disclosures - correct answer allow for additional information beyond the statements
including forward-looking information
Asset-Liability - correct answer An accounting approach that focuses on the value of assets or
liabilities that exist as of the balance sheet date. Does not use earned premium concept and affects the
income statement.
premium revenue - correct answer equals the written premium during the period plus the beginning
unearned premium liability less the ending unearned premium liability.
ultimate premium revenue - correct answer equals total written premiums to date
,Premium - correct answer represents the most significant source of revenue for most insurers and is a
principal measure of insurer size and growth
tax surcharges - correct answer creates a temporary entry in the cash asset account and in the
noninsurance liability account
deposit premium - correct answer The amount a policyholder pays at the beginning of a policy period,
pending the determination of the actual premium owed
reinstatement premium - correct answer A premium that applies to reinsurance contracts or primary
policies to reinstate the original policy limit after it has been exhausted by the covered event in order to
cover another possible event under the reinsurance or primary policy.
earned but unbilled (EBUB) and earned but not reported (EBNR) - correct answer Two terms
sometimes used to represent premium that has been earned
Extended Reporting Endorsements - correct answer to be recorded as unearned premium reserves
when the extension is for a definite period into the future and as loss reserves when the extension is for
an indefinite period.
Audit Premium - correct answer an example of premium earned before it is written
The premium deficiency reserve is generally equal to - correct answer the difference between the
expected losses and expenses underlying the unearned premiums and the unearned premium reserve
reported on the financial statements.
Pro Rata - correct answer Based on accounting rules, which earning approach may be allowed, as an
exception, when the effect is not material to the financial statements.
additional case reserve - correct answer This reserve is most common for claims under assumed
reinsurance contracts
, Subrogation - correct answer The process by which an insurer can, after it has paid a loss under the
policy, recover the amount paid from any party (other than the insured) who caused the loss or is
otherwise legally liable for the loss.
an insurer's right to recover the amount of claim payment from a responsible third party.
bulk reserves - correct answer reserve representing the estimated deficiency in the aggregate of case
reserves for known claims are known as bulk reserves.
employee-benefit accounting - correct answer accounting standards or rules may apply to self-
insured liabilities related to workers compensation claims?
suspense account - correct answer When a claim payment is made but the corresponding entry has
not yet been made, the payment is registered to
loss portfolio transfer - correct answer A type of retroactive plan that applies to an entire portfolio of
losses.
retrocession - correct answer A reinsurance agreement whereby one reinsurer (the retrocedent)
transfers all or part of the reinsurance risk it has assumed or will assume to another reinsurer (the
retrocessionaire).
retrocessionaire - correct answer The reinsurer that assumes all or part of the reinsurance risk
accepted by another reinsurer.
US GAAP treatment of ceded losses on a balance sheet - correct answer Ceded loss reserves are
treated as an asset.
deposit accounting rules - correct answer 1) No transfer of risk 2) timing risk exists, but amount of risk
is negligible 3) reinsurance is retroactive
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