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Q151. (Topic 3)
The term umbrella market segmentation is referred to:
A. Financial services
B. Insurance companies
C. Banks
D. Brokerage Houses
Answer: A
Q152. (Topic 5)
Customer accounts:
Ensure that the firm is exercising due diligence in the opening and supervision of customer accounts. The procedures should be formalized in writing and in accordance with the rules and regulations of the appropriate regulatory authority.
Ensure that daily customer positions and option exercises are in accordance with the limits established by the appropriate exchange. Verify that commissions generated by customer trades are properly calculated and posted to the general ledger.
A. This is one of the primary audit objectives of stock and options
B. This is one of the primary audit objectives of swaps
C. This is one of the primary audit objectives of bonds
D. None of these
Answer: A
Q153. (Topic 3)
Universal life policies are a form of permanent life insurance that has flexible premiums, flexible face amounts, and separate pricing for the three major pricing categories. Which of the following is/are out of those categories?
A. Mortality charges based on the insurer’s risk classification
B. Internet rate paid on the cash value
C. Expenses associated with administering the policy
D. All of these
Answer: D
Q154. (Topic 1)
Data gathering and evaluation during field work includes:
A. Gaining and understanding of the activity, system, or process under review
B. Observing conditions and operations C. Interviewing people and examining assets and accounting, and other operational business, and other operational records.
D. All of these
Answer: D
Q155. (Topic 1)
Which one of the following is NOT an indicator of control weakness in derivatives?
A. Application of inappropriate valuation models
B. Management not involved
C. Evidence of a “Star Manager” syndrome
D. Absence of fiduciary mentality
Answer: A
Q156. (Topic 3)
IF a securitization transaction meets FAS 125 sale or servicing criteria, the seller must recognize any gain or loss on the sale of the pool immediately and carry any retained interests in the assets sold ( including servicing rights/obligation and interest-only strips) at ____________.
A. Principal value
B. Fair value
C. Premium Amount
D. Both A&C
Answer: B
Q157. (Topic 1)
“Audit management must decide whether to sample (judgment or statistical) or use the entire universe, and which specific quantitative and qualitative methodologies will provide sufficient, competent and relevant evidence to answer the questions posed in the audit objectives.” It is an example of:
A. Determining appropriate audit methods and strategies
B. Determining resources needed to conduct the audit
C. Determining audit scope
D. None of these
Answer: A
Q158. (Topic 3)
Hospitals document reserves as that portion of the accounts receivables that they hope to collect but have some doubt about its collectability. Rather than book these amounts as income, hospitals will “____________” These amounts until paid.
A. Bad debts
B. Reserve
C. Income expense
D. All (Allowance for loans and lease losses)
Answer: B
Q159. (Topic 3)
Whole life policies offer lifetime coverage at a level premium rate that does not increase as the insured ages. Whole life policies are classified in all of the below mentioned categories EXCEPT:
A. Continuous premium policies
B. Limited payment policies
C. Decreasing life policies
D. Single premium policies
Answer: C
Q160. (Topic 4)
Checking account may pay interest. Checking accounts that pay interest are referred as a:
A. Saving deposit
B. Direct deposit
C. MMDAS (money market deposit account)
D. Negotiable order of withdrawal account (NOW)
Answer: D
Q161. (Topic 1)
Which one of the following statements is NOT the part of audit work schedule?
A. The extent and type of findings in the last audit
B. Loss of assets, errors and fraud
C. The availability of audit staff resources
D. Opportunities to achieve operations benefits
Answer: B
Q162. (Topic 3)
Under the principles of bank accounting, loans reported as non-performing have not yet been charged off as _____________.
A. Income
B. Expense
C. Losses
D. prepaid
Answer: C
Q163. (Topic 5)
Optional basic and supplement life insurances are the variants of:
A. Ordinary life insurance
B. Group life insurance
C. Accidental death and Dismemberment
D. None of these
Answer: B
Q164. (Topic 3)
The accounting standards in the United State are:
A. Generally accepted accounting principles
B. U.S. Generally accepted accounting principles
C. IFRS Standards
D. None of these
Answer: B
Q165. (Topic 2)
Which one of the following does NOT depicts a common indexing method?
A. The annual ratchet
B. The point to point method
C. The high water mark method
D. The low water mark method
Answer: D