LOMA 291 Module 4 Questions with
Complete Solutions
external regulator As a regulator, my role is to protect the interests of consumers who
have purchased insurance policies. I want to know that an insurer can honor its obligations to
policyholders at all times. My focus is on the company's ability to pay its bills rather than its
ability to make a profit. Is Forthright making sound business decisions so that it will remain
solvent?
financial accounting The field of accounting that focuses primarily on reporting a
company's financial accounting information to meet the needs of the company's external
stakeholders.
- regulators
- creditors
- investors
- rating agencies
- tax authorities
Management accounting The field of accounting that focuses primarily on reporting and
presenting a company's financial information to meet the needs of the company's internal users.
,- managers
financial statements Standardized summary reports of a company's major monetary events
and transactions.
tax accounting Large insurers often have a separate function that handles tax reporting,
which has its own set of reporting rules. In smaller companies, the accounting function typically
is responsible for tax reporting.
For insurers, one unique aspect of tax accounting is premium taxes. Forthright pays premium
taxes on the premiums paid to Forthright within a particular jurisdiction. Premium taxes are
calculated as a percentage of these premiums.
Premium taxes A tax on the premium income an insurer receives within a particular
jurisdiction.
Since we've already discussed financial accounting, can you figure out which of the choices
below describes management accounting?
a. Helps external parties understand the company's financial situation and performance
b. Helps company managers make the best use of internal resources
,c. Has a primary of goal of producing financial statements for the company B. - In
contrast to financial accounting, which is primarily designed to meet the needs of external
parties, management accounting is designed to provide information for internal parties, such as
company managers. Production of the company's financial statements is the end goal of financial
accounting, not management accounting.
Management accounting is limited to analyzing past company performance.
a. True
b. False B. - Although information on current and past performance is an important
starting point, management accounting is future-focused. Financial accounting, on the other
hand, is limited to creating reports on the company's current situation and past performance.
Management accounting can focus on different parts of the business, such as Product lines
or products
Specific business functions
Specific operating units
I use management accounting tools to Measure the profitability of products and services
Analyze operating costs and manage expenses
, Budget resources to support goals
Evaluate the efficiency of procedures and personnel
The person who manages accounting and financial reporting is generally the
a. CFO
b. Controller
c. CEO B. - Accounting is usually managed by the Controller, who reports to the CFO.
One type of tax paid by insurers is premium taxes. Most jurisdictions assess an insurer's
premium taxes as a
a. percentage of premium income received
b. percentage of assets held
c. flat amount for each company A. - Premium taxes are calculated as a percentage of
premium income received.
(Financial / Management) accounting reports on past performance and the current situation.
(Financial / Management) accounting is designed to help managers make the best use of
resources.
Complete Solutions
external regulator As a regulator, my role is to protect the interests of consumers who
have purchased insurance policies. I want to know that an insurer can honor its obligations to
policyholders at all times. My focus is on the company's ability to pay its bills rather than its
ability to make a profit. Is Forthright making sound business decisions so that it will remain
solvent?
financial accounting The field of accounting that focuses primarily on reporting a
company's financial accounting information to meet the needs of the company's external
stakeholders.
- regulators
- creditors
- investors
- rating agencies
- tax authorities
Management accounting The field of accounting that focuses primarily on reporting and
presenting a company's financial information to meet the needs of the company's internal users.
,- managers
financial statements Standardized summary reports of a company's major monetary events
and transactions.
tax accounting Large insurers often have a separate function that handles tax reporting,
which has its own set of reporting rules. In smaller companies, the accounting function typically
is responsible for tax reporting.
For insurers, one unique aspect of tax accounting is premium taxes. Forthright pays premium
taxes on the premiums paid to Forthright within a particular jurisdiction. Premium taxes are
calculated as a percentage of these premiums.
Premium taxes A tax on the premium income an insurer receives within a particular
jurisdiction.
Since we've already discussed financial accounting, can you figure out which of the choices
below describes management accounting?
a. Helps external parties understand the company's financial situation and performance
b. Helps company managers make the best use of internal resources
,c. Has a primary of goal of producing financial statements for the company B. - In
contrast to financial accounting, which is primarily designed to meet the needs of external
parties, management accounting is designed to provide information for internal parties, such as
company managers. Production of the company's financial statements is the end goal of financial
accounting, not management accounting.
Management accounting is limited to analyzing past company performance.
a. True
b. False B. - Although information on current and past performance is an important
starting point, management accounting is future-focused. Financial accounting, on the other
hand, is limited to creating reports on the company's current situation and past performance.
Management accounting can focus on different parts of the business, such as Product lines
or products
Specific business functions
Specific operating units
I use management accounting tools to Measure the profitability of products and services
Analyze operating costs and manage expenses
, Budget resources to support goals
Evaluate the efficiency of procedures and personnel
The person who manages accounting and financial reporting is generally the
a. CFO
b. Controller
c. CEO B. - Accounting is usually managed by the Controller, who reports to the CFO.
One type of tax paid by insurers is premium taxes. Most jurisdictions assess an insurer's
premium taxes as a
a. percentage of premium income received
b. percentage of assets held
c. flat amount for each company A. - Premium taxes are calculated as a percentage of
premium income received.
(Financial / Management) accounting reports on past performance and the current situation.
(Financial / Management) accounting is designed to help managers make the best use of
resources.
