LOMA 308 Test with
Complete Solutions
Graded A+
Basic accounting equation - Answer-An equation which states that a company's assets
equal the sum of its liabilities and its capital and surplus
Generally Accepted Accounting Principles (GAAP) - Answer-A set of financial
accounting standards, conventions and rules that stock insurance companies follow
when summarizing transactions and preparing financial statements
Statutory accounting principles (SAP) - Answer-Accounting standards that all life
insurers in the US must follow when preparing the annual statement and specified
financial reports that are submitted to regulators. Used for preparing the Annual
Statement
Top down budgeting - Answer-A budgeting approach that begins at the top level of
management and is passed down to lower level management
Bottom up budgeting - Answer-A budgeting approach that starts at the bottom of a
company, with lower level managers generating budget for their areas, which are then
presented in the form of recommendations to senior management
Zero based budgeting - Answer-A budgeting approach in which a company begins with
the premise that no resources will be allocated for the next accounting period unless
and until each expense is shown to be in accord with the company's strategic and
operational goals
Master budget - Answer-A budget that shows the overall operating and financial plans
for a company during a specified accounting period, formed by combining all of the
individual budgets for each department
Operational budget - Answer-A budget that includes all of a company's core business
operations and shows the revenue and expenses that a company expects during a
specified accounting period
, Capital budget - Answer-A budget which shows a company's plans for the financial
management of its long term high cost investment proposals
Cash budgets - Answer-A budget which projects a company's beginning cash balance,
cash outflows and ending cash balance for a specified accounting period, typically by
quarter
Revenue budget - Answer-A type of operational budget that indicates the amount of
revenue from operations that a company expects in the coming budget period
Expense budget - Answer-A type of operational budget that presents a schedule of
expenses expected during an accounting period
Cash receipts budget - Answer-A schedule of cash receipts (cash inflows) expected
during an accounting period
Cash disbursement budget - Answer-A schedule showing the timing and amount of all
cash disbursements (cash outflows) expected during an accounting period
Simple random sampling - Answer-A type of probability sampling that involves selecting
items from the population at a uniform interval which is generally measured by time,
order or space
Stratified random sampling - Answer-A type of probability sampling that divides the
population into subgroups, or strata, and then selects a proportional number of items
from each stratum at random
Transfer payments - Answer-A payment made by a govt for which no goods or services
are given in return
Intermediation - Answer-The transfer of funds from savers to borrowers through the
services of a financial intermediary
Product (output) markets - Answer-A market in which businesses supply finished goods
and service to households, other businesses and governments
Labor markets - Answer-A market in which households offer their labor to businesses
and governments in exchange for wages or other compensation
Financial (capital) market - Answer-A market in which money is transferred from savers
to borrowers
Medium of exchange - Answer-A standardized method of making and receiving
payments for goods and services
Complete Solutions
Graded A+
Basic accounting equation - Answer-An equation which states that a company's assets
equal the sum of its liabilities and its capital and surplus
Generally Accepted Accounting Principles (GAAP) - Answer-A set of financial
accounting standards, conventions and rules that stock insurance companies follow
when summarizing transactions and preparing financial statements
Statutory accounting principles (SAP) - Answer-Accounting standards that all life
insurers in the US must follow when preparing the annual statement and specified
financial reports that are submitted to regulators. Used for preparing the Annual
Statement
Top down budgeting - Answer-A budgeting approach that begins at the top level of
management and is passed down to lower level management
Bottom up budgeting - Answer-A budgeting approach that starts at the bottom of a
company, with lower level managers generating budget for their areas, which are then
presented in the form of recommendations to senior management
Zero based budgeting - Answer-A budgeting approach in which a company begins with
the premise that no resources will be allocated for the next accounting period unless
and until each expense is shown to be in accord with the company's strategic and
operational goals
Master budget - Answer-A budget that shows the overall operating and financial plans
for a company during a specified accounting period, formed by combining all of the
individual budgets for each department
Operational budget - Answer-A budget that includes all of a company's core business
operations and shows the revenue and expenses that a company expects during a
specified accounting period
, Capital budget - Answer-A budget which shows a company's plans for the financial
management of its long term high cost investment proposals
Cash budgets - Answer-A budget which projects a company's beginning cash balance,
cash outflows and ending cash balance for a specified accounting period, typically by
quarter
Revenue budget - Answer-A type of operational budget that indicates the amount of
revenue from operations that a company expects in the coming budget period
Expense budget - Answer-A type of operational budget that presents a schedule of
expenses expected during an accounting period
Cash receipts budget - Answer-A schedule of cash receipts (cash inflows) expected
during an accounting period
Cash disbursement budget - Answer-A schedule showing the timing and amount of all
cash disbursements (cash outflows) expected during an accounting period
Simple random sampling - Answer-A type of probability sampling that involves selecting
items from the population at a uniform interval which is generally measured by time,
order or space
Stratified random sampling - Answer-A type of probability sampling that divides the
population into subgroups, or strata, and then selects a proportional number of items
from each stratum at random
Transfer payments - Answer-A payment made by a govt for which no goods or services
are given in return
Intermediation - Answer-The transfer of funds from savers to borrowers through the
services of a financial intermediary
Product (output) markets - Answer-A market in which businesses supply finished goods
and service to households, other businesses and governments
Labor markets - Answer-A market in which households offer their labor to businesses
and governments in exchange for wages or other compensation
Financial (capital) market - Answer-A market in which money is transferred from savers
to borrowers
Medium of exchange - Answer-A standardized method of making and receiving
payments for goods and services
