LOMA 361 TEST ANSWERS AND QUESTIONS SET A+
✔✔Operating Expenses - ✔✔Taxes
Investigation, litigation, and settlement costs
Travel, advertising, postage, telephone and subscriptions
Business-related Insurance (such as Work Comp)
Bank service charges
Licensing fees
Real estate expenses: rent, utilities, maintenance
Salaries and benefits for home office employees
Producer commissions or salaries
Professional fees: public accounting, legal
✔✔Expense vs. Liability accounts - ✔✔"Incurred" or "Paid" = expense
"Due" or "Accrued" = liability
✔✔External sources of funds - ✔✔Issuing surplus notes
Ceding insurance risk to a reinsurer
Selling in-force business or a subsidiary
Issuing stock
Changing corporate form
✔✔Income as asset accounts - ✔✔Uncollected
Accrued
Deferred
(Collected = Revenue or Liability)
(Unearned = Liability)
✔✔Liquidity Ratio - ✔✔Quick Liquidity Ratio =
Liquid Assets / Contractual Reserves
✔✔Activity Ratio - ✔✔Total Asset Turnover = Total Revenues / Total Assets
✔✔Leverage Ratios (3) - ✔✔Debt-to-Surplus Ratio = Total Liab / Total Surplus
, Insurance Leverage Ratio =
Contractual Reserves / Capital & Surplus
Surplus Relief Ratio =
Net cost/income from reinsurance / Capital & Surplus
✔✔Capital & Surplus Ratios (3) - ✔✔Capital & Surplus Ratio =
Capital & Surplus / Total Liabilities
Capital ratio = Capital / Total Liabilities
Surplus ratio = Surplus / Total Liabilities
✔✔Profitability Ratios (5) - ✔✔Return on Capital Ratio =
Net gain from Ops / Beginning C&S
Gross Profit Ratio =
Gross contributions to C&S / Beginning C&S
Net Gain to Total Income Ratio =
Net gain from Ops / (Total Income + Realized Cap Gains)
Investment Yield Ratio =
Investment Income / Average Invested Assets
Earnings Per Share =
Net Income / Number of shares outstanding
✔✔Capital Accounts - ✔✔Common Stock
Preferred Stock
Additional Paid-in Capital (GAAP) vs. "Gross Paid-In and Contributed Surplus" (Stat) --
for when the selling price of stock is greater than par value.
Retained Earnings (GAAP) vs "Special Surplus" or "Unassigned Surplus" (Stat)
✔✔Contra accounts - ✔✔Treasury stock (Common stock)
✔✔Behavior Costs Classifications - ✔✔- fixed
- variable
- semi-variable
✔✔Measurement Costs Classifications - ✔✔- standard
- unit
✔✔Operating Expenses - ✔✔Taxes
Investigation, litigation, and settlement costs
Travel, advertising, postage, telephone and subscriptions
Business-related Insurance (such as Work Comp)
Bank service charges
Licensing fees
Real estate expenses: rent, utilities, maintenance
Salaries and benefits for home office employees
Producer commissions or salaries
Professional fees: public accounting, legal
✔✔Expense vs. Liability accounts - ✔✔"Incurred" or "Paid" = expense
"Due" or "Accrued" = liability
✔✔External sources of funds - ✔✔Issuing surplus notes
Ceding insurance risk to a reinsurer
Selling in-force business or a subsidiary
Issuing stock
Changing corporate form
✔✔Income as asset accounts - ✔✔Uncollected
Accrued
Deferred
(Collected = Revenue or Liability)
(Unearned = Liability)
✔✔Liquidity Ratio - ✔✔Quick Liquidity Ratio =
Liquid Assets / Contractual Reserves
✔✔Activity Ratio - ✔✔Total Asset Turnover = Total Revenues / Total Assets
✔✔Leverage Ratios (3) - ✔✔Debt-to-Surplus Ratio = Total Liab / Total Surplus
, Insurance Leverage Ratio =
Contractual Reserves / Capital & Surplus
Surplus Relief Ratio =
Net cost/income from reinsurance / Capital & Surplus
✔✔Capital & Surplus Ratios (3) - ✔✔Capital & Surplus Ratio =
Capital & Surplus / Total Liabilities
Capital ratio = Capital / Total Liabilities
Surplus ratio = Surplus / Total Liabilities
✔✔Profitability Ratios (5) - ✔✔Return on Capital Ratio =
Net gain from Ops / Beginning C&S
Gross Profit Ratio =
Gross contributions to C&S / Beginning C&S
Net Gain to Total Income Ratio =
Net gain from Ops / (Total Income + Realized Cap Gains)
Investment Yield Ratio =
Investment Income / Average Invested Assets
Earnings Per Share =
Net Income / Number of shares outstanding
✔✔Capital Accounts - ✔✔Common Stock
Preferred Stock
Additional Paid-in Capital (GAAP) vs. "Gross Paid-In and Contributed Surplus" (Stat) --
for when the selling price of stock is greater than par value.
Retained Earnings (GAAP) vs "Special Surplus" or "Unassigned Surplus" (Stat)
✔✔Contra accounts - ✔✔Treasury stock (Common stock)
✔✔Behavior Costs Classifications - ✔✔- fixed
- variable
- semi-variable
✔✔Measurement Costs Classifications - ✔✔- standard
- unit
