Which of the Following Statements Is Not in Accordance with AASB

question 36

Multiple Choice

Which of the following statements is not in accordance with AASB 1023 "General Insurance Contracts"?

• A) Premium that has not been recognised in the income statement is premium that is unearned and shall be recognised in the balance sheet as an unearned premium liability.
• B) The outstanding claims liability may be discounted for the time value of money using government bond rates that match the structure and term of the future obligations.
• C) The expected future payments include:(a) unpaid reported claims;(b) claims incurred but not reported;(c) claims incurred but not enough reported; and (d) acquisition costs;
• D) An outstanding claims liability shall be recognised in respect of direct business and reinsurance business and shall be measured as the central estimate of the present value of the expected future payments for claims incurred with an additional risk margin to allow for the inherent uncertainty in the central estimate.
• E) None of the given answers.

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Definitions:

Periodic Inventory System

A method of inventory valuation where updates to inventory levels and cost of goods sold are made periodically at the end of an accounting period, rather than after each sale or purchase.

LIFO Method

An inventory valuation method that assumes the last items placed in inventory are the first sold during an accounting year.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials, labor, and overhead.

Weighted-Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, giving more weight to some numbers than others.