LOMA 361- INTRO TO ACCOUNTING AND FINANCIAL REPORTING (MODULE 1) QUESTIONS
WITH CORRECT ANSWERS LATEST UPDATE 2026
_________________ is a system or set of rules and methods for collecting, processing,
reporting, and monitoring financial info about a company. - Answers Accounting
Closely related to accounting is ____________ reporting, which is the process of presenting
financial info about a company's financial position, operating performance, and flow of funds
into and out of a company. - Answers financial
The accounting function consists of processes and activities that help answer 5 key business
questions: - Answers 1) What does the company own?
2) What does the company owe?
3) What has the company retained?
4) What has the company earned?
5) What has the company spent?
A __________ transaction is a transaction to which a company must assign an objective
monetary value, whether the impact on the company is large or small, actual or expected. -
Answers business
_____________ is a company's ability to meet its financial obligations when they become due. -
Answers Solvency
_______________ is the overall degree of success a company has in generating positive returns
for its owners, including the company's ability to generate profits and increase the value of the
company. - Answers Profitability
Internal users of a company's accounting info include the company's (list 3): - Answers 1)
employees
2) directors
3) officers
A company's internal users typically have a __________ financial interest in the company, which
means they can gain or lose money as a result of the company's financial performance. -
Answers direct
,_____________ users of a company's accounting info are people and organizations outside the
company who use the company's financial info to make various decisions about the company. -
Answers External
True or False:
External users can have either a direct or indirect financial interest in the company's
performance. - Answers True
External users who have a DIRECT financial interest in an insurer's performance include (list 8): -
Answers 1) Individual policyowners
2) Group policyholders
3) Benes
4) Insureds
5) Stockholders
6) Agents
7) Reinsurers
8) Creditors
External users who have an ___________ financial interest in a company's financial info are
generally seeking a company's financial info on behalf of others. - Answers indirect
Ex: competing companies, external auditors, federal agencies, state insurance depts,
independent rating agencies, tax authorities
__________ insurance depts play a particularly important role as external users of a company's
financial info: they evaluate the company's financial info to ensure that it will be able to pay its
benefit obligations, which may arise decades into the future. - Answers State
True or False:
Sometimes an individual or entity is both an internal and external user of an insurer's financial
info. - Answers True
, Ex: Insurance company employees may also be policyowners, insureds, or stockholders.
An external user of an insurer's financial info may have a direct and an indirect financial interest
to the insurer.
An independent rating agency has assigned a rating to Sundog Life Insurance Company. This
rating agency is an example of an (internal/external) user of Sundog's financial info, and the
agency has (a direct/an indirect) financial interest in Sundog's performance. - Answers external
an indirect
_____________ accounting is the field of accounting that focuses primarily on reporting a
company's financial info to meet the needs of the company's external users. - Answers Financial
Financial ______________ are summary reports of a company's financial condition on a
specified date or of its performance during a specified period. - Answers statements
List 4 common financial statements: - Answers 1) balance sheet
2) income statement
3) cash flow statement
4) statement of owners' equity
True or False:
A company's financial statements focus on the company's historical, or past, financial
performance and must comply with applicable laws, regulations, and accounting standards. -
Answers True
For our purposes, _______________ standards are guidelines or rules that describe how
business transactions should be measured, presented, and disclosed in financial statements. -
Answers accounting
For US life insurers, what are 3 important accounting standards associated with financial
accounting? - Answers 1) Generally accepted accounting principles (GAAP)
2) Statutory accounting principles (SAP)
WITH CORRECT ANSWERS LATEST UPDATE 2026
_________________ is a system or set of rules and methods for collecting, processing,
reporting, and monitoring financial info about a company. - Answers Accounting
Closely related to accounting is ____________ reporting, which is the process of presenting
financial info about a company's financial position, operating performance, and flow of funds
into and out of a company. - Answers financial
The accounting function consists of processes and activities that help answer 5 key business
questions: - Answers 1) What does the company own?
2) What does the company owe?
3) What has the company retained?
4) What has the company earned?
5) What has the company spent?
A __________ transaction is a transaction to which a company must assign an objective
monetary value, whether the impact on the company is large or small, actual or expected. -
Answers business
_____________ is a company's ability to meet its financial obligations when they become due. -
Answers Solvency
_______________ is the overall degree of success a company has in generating positive returns
for its owners, including the company's ability to generate profits and increase the value of the
company. - Answers Profitability
Internal users of a company's accounting info include the company's (list 3): - Answers 1)
employees
2) directors
3) officers
A company's internal users typically have a __________ financial interest in the company, which
means they can gain or lose money as a result of the company's financial performance. -
Answers direct
,_____________ users of a company's accounting info are people and organizations outside the
company who use the company's financial info to make various decisions about the company. -
Answers External
True or False:
External users can have either a direct or indirect financial interest in the company's
performance. - Answers True
External users who have a DIRECT financial interest in an insurer's performance include (list 8): -
Answers 1) Individual policyowners
2) Group policyholders
3) Benes
4) Insureds
5) Stockholders
6) Agents
7) Reinsurers
8) Creditors
External users who have an ___________ financial interest in a company's financial info are
generally seeking a company's financial info on behalf of others. - Answers indirect
Ex: competing companies, external auditors, federal agencies, state insurance depts,
independent rating agencies, tax authorities
__________ insurance depts play a particularly important role as external users of a company's
financial info: they evaluate the company's financial info to ensure that it will be able to pay its
benefit obligations, which may arise decades into the future. - Answers State
True or False:
Sometimes an individual or entity is both an internal and external user of an insurer's financial
info. - Answers True
, Ex: Insurance company employees may also be policyowners, insureds, or stockholders.
An external user of an insurer's financial info may have a direct and an indirect financial interest
to the insurer.
An independent rating agency has assigned a rating to Sundog Life Insurance Company. This
rating agency is an example of an (internal/external) user of Sundog's financial info, and the
agency has (a direct/an indirect) financial interest in Sundog's performance. - Answers external
an indirect
_____________ accounting is the field of accounting that focuses primarily on reporting a
company's financial info to meet the needs of the company's external users. - Answers Financial
Financial ______________ are summary reports of a company's financial condition on a
specified date or of its performance during a specified period. - Answers statements
List 4 common financial statements: - Answers 1) balance sheet
2) income statement
3) cash flow statement
4) statement of owners' equity
True or False:
A company's financial statements focus on the company's historical, or past, financial
performance and must comply with applicable laws, regulations, and accounting standards. -
Answers True
For our purposes, _______________ standards are guidelines or rules that describe how
business transactions should be measured, presented, and disclosed in financial statements. -
Answers accounting
For US life insurers, what are 3 important accounting standards associated with financial
accounting? - Answers 1) Generally accepted accounting principles (GAAP)
2) Statutory accounting principles (SAP)
