Acct424 Insurance accounting

Assignment Question(s):

Q1. The following financial transactions are related with a General Takaful Product:
i. An amount of SAR 6,200 received as advanced contribution from new participants.
ii. An amount of SAR 4,500 received as a contribution from new participants.
iii. Contribution renewal received from participants SAR 5,500.

You are required to prepare necessary journal entries. (1.5 Marks)
Answer:

Q2. Discuss the three primary methods used by Guaranty Fund to assess property and liability insurance using your own words. (2 Marks)
Answer:

Q3. XYZ Company has the following financial data: (1.5 marks)

Particulars
Amounts (SAR)
Total Profit for the Year
377,500
General Takaful Assets (Year 2014)
1,390,000
General Takaful Assets (Year 2015)
1,517,500
Cash
11,500
Short-term Investment
23,500
Short term liabilities
85,000
Underwriting Surplus Distributable to Participants/Participants’ Share of Profit
145,500
Gross Contribution
958,000
Net Contribution
662,500
Wakalah Fee
77,500
Commission Paid
28,300
Management Expense
58,000
Net Claim Incurred
287,500
Earned Contribution
632,500

You are required to calculate:
a)Return on Assets
b)Quick Liquidity
c)Surplus Distribution Ratio
d)Expense Ratio
e)Claims Ratio

Answer: