LOMA 361: INTRO TO ACCOUNTING AND FINANCIAL
REPORTING (MODULE 1)
_________________ 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)
3) IFRS standards
True or False:
Many US insurers currently prepare 2 sets of financial statements. One set based on
GAAP and another based on SAP. - Answers -True
_______________ accepted accounting principles (GAAP) are a set of financial
accounting standards, conventions, and rules that all publicly traded companies must
follow when summarizing transactions and preparing their financial statements. -
Answers -Generally
A ____________ traded company is a company whose stocks or bonds are offered for
sale to the public. - Answers -publicly
GAAP focuses on a company's ______________. - Answers -profitability
In the US, an important report prepared using GAAP is the ___________ Report, which
is a document that a company's management sends to interested parties to explain the
company's financial performance during the past year. - Answers -Annual
Statutory accounting principles (SAP) are accounting standards that all life insurers in
the US must follow when preparing the Annual _________________ and other
REPORTING (MODULE 1)
_________________ 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)
3) IFRS standards
True or False:
Many US insurers currently prepare 2 sets of financial statements. One set based on
GAAP and another based on SAP. - Answers -True
_______________ accepted accounting principles (GAAP) are a set of financial
accounting standards, conventions, and rules that all publicly traded companies must
follow when summarizing transactions and preparing their financial statements. -
Answers -Generally
A ____________ traded company is a company whose stocks or bonds are offered for
sale to the public. - Answers -publicly
GAAP focuses on a company's ______________. - Answers -profitability
In the US, an important report prepared using GAAP is the ___________ Report, which
is a document that a company's management sends to interested parties to explain the
company's financial performance during the past year. - Answers -Annual
Statutory accounting principles (SAP) are accounting standards that all life insurers in
the US must follow when preparing the Annual _________________ and other
