UNIT 2

1. The banking regulation Act --.

A. 1949
B. 1947
C. 1932
D. 1956
Answer: A
2. Banking companies in India are governed by …………………..
A. As per act 1932
B. Income Tax act
C. S-23
D. Banking Regulation Act 1949
Answer: D
3. An assets becomes non performing when it to generate income for bank.
A. lease
B. ceases
C. computerized
D. easy.
Answer: B
4. Banks are to recognize their income on…..........................................basis in respect of income on
performing asset.
A. Accrual
B. cash
C. credit
D. none.
Answer: A
5. Banks are to recognize their income on…...............................................basis in respect of income
on non performing asset.
A. Accrual
B. cash
C. credit
D. none.
Answer: B
6. Sub standard asset are certain loan asset of a bank which are classified as
………….assets for a period not exceeding two year.
A. non –performing
B. performing
C. Current
D. Fluctuating.
Answer: A
7. The main function of….....................................company are accepts deposits money
A. Private
B. Public
C. Banking
D. Capital marketing
Answer: B
8.asset is one which has been classified as non-performing asset for
period not exceeding than…..............................years
A. Fixed – 13
 B. Fluctuating – 11
C. Intangible – 1
D. Substandard – 2
Answer: A
9. Core banking system…..............................system.
A. Bank end
B. work flow
C. open end
D. internal
Answer: A
10. Every banking company should prepare a balance sheet and profit and loss accounts as on…
each year.
A. 31st March
B. 31st July
C. 31st December
D. None
Answer: A
11. Banking Companies in India are governed by Banking Regulation act 1952.
A. true
B. false
C. may be true
D. ma be false
Answer: B
12. The main function of a banking company are to accept deposits of money from the public and to lend
or invest these deposits.
A. true
B. false
C. only true
D. ma be false
Answer: A
13. Non-Banking Assets must be shown in the Balance Sheet in scheduled 8.
A. true
B. may be false
C. may be true
D. false
Answer: B
14. Acceptance, Endorsements and other obligations are a contingent liability of bank.
A. True
B. False
C. May be false
D. May be true
Answer: B
15. Rebate of Bills discounted is an income received in advanced which is carried forward as other
liability.
A. true
B. false
C. may be true
D. only true
Answer: A
16. Transfer of money from one place to another i.e. mail transfer is an item to be excluded from bills
payable.
A. True
B. False
C. May be false
D. May be true
Answer: B
17. An assets become non-performing when it ceases to generate income for a Bank.
A. True
B. False
C. May be false
D. May be true
Answer: A
18. Banks are to recognize their income on cash basis in respect of income on performing assets.
A. true
B. false
C. may be true
D. may be false
Answer: B
19. Sub-standard assets is one which has been classified as non performing asset for a period not
exceeding three years.
A. true
B. false
C. may be true
D. only true
Answer: B
20. Every banking company incorporated in India must transfer to the Reserve fund a sum equivalent
to not less than 25% of profit of each year before declaration of dividend.
A. true
B. false
C. only a
D. a or b
Answer: A
21. A banking company can pay dividend on its shares
A. After writing off all its capitalized expenses including preliminary expenses.
B. After charging depreciation on its investments.
C. After charging bad debts where adequate provisions has been made to the satisfaction of the
auditor.
D. Before charging depreciation on its investments and writing off all its capitalized expenses.
Answer: 1
22. On 1.4.20X1 Bills for collection were ₹ 10,000. During 20X1-20X2 bills received for collection amounted
to ₹ 1,00,000, bills collected were ₹ 80,000 and bills dishonoured and returned were ₹ 5,000. What will be
the amount of bills for collection (assets) account as on 31.3.20X2?
A. 25,000
B. 30,000
C. 35,000
D. None of the above.
Answer: 1
23. Rebate on bill discounted is shown in the
A. Assets side of the balance sheet.
B. Liabilities side of the balance sheet.
C. Income side of the income statement.
D. Expense side of the income statement.
Answer: 2
24. Bills for collection are shown
A. On Assets side of the balance sheet.
B. On liabilities side of the balance sheet.
C. On the income side of the income statement.
D. As note below the balance sheet.
Answer: 4
25. What percentage of provision is required on standard assets (other than advances to agricultural, SME
and Commercial Real Estate)?
A. 10
B. 40
C. 0.40
D. 0.25
Answer: 3
26. In case of direct advances to agricultural and SME, What percentage of provision is required on standard
assets?
A. 0.25
B. 40
C. 0.40
D. 25
Answer: 1
27. When income is to be recognized on cash basis by Safe Trust Bank, a distinction should be made
between
A. Banking and Non-banking assets.
B. Monetary and Non-banking assets.
C. Current and Non-current assets.
D. Performing and Non-performing assets.
Answer: 4
28. For the year ended 31st March, 20X1 non-performing assets classified as substandard in Centura Bank
Ltd. will be classified as doubtful after
A. 24 months
B. 18 months
C. 12 months
D. 180 days
Answer: 3
29. In case of advances to Commercial Real Estate (CRE) Sector, What percentage of provision is required on
standard assets?
A. 0.25
B. 1.00
C. 0.40
D. 25.0
Answer: 2
30. General insurance policies are generally taken for
a. One year
b. two year
c. three year
d. none of these
Ans-A
31. When a policy matures on the death of the insured, it is expressed as:
a. With profit policy
b. without profit policy
c. whole life policy
d. None of these
Ans-C
32. In the revenue account bonus in reduction of premium is shown as:
a. Liability
b. Income
c. Expense
d. None of these
Ans-C
33. The fixed assets of an insurance company are shown in
a. Schedule 6
b. Schedule 7
c. Schedule 8
d. None of these
Ans-D
34. Insurance Regulations and Development Authorities Act came to effect in :
a. 1938
b. 1999
c. 2000
d. None of these
Ans-B
35. Which of the following of an insurance company does not fall under ‘ Income from investments’.
a. Interest and dividends
b. Profit on sale of investments
c. Share transfer fees
d. None of these
Ans-C
36. Which of the following of an insurance company is included in other asset
a. Loan to directors
b. Agent’s balance(dr)
c. Advance tax paid
d. None of these
Ans-B
37. Reserve for unexpired risk is shown under :
a. Reserves and surplus
b. Current liabilities
c. Provisions
d. None of these
Ans-C
38. In life insurance business , claims may arise on …………………….
a. death
b. maturity
c. death or maturity
d. none of these
Ans-C
39. Surrender value is an expression that is used in case of ……………….Insurance business .
a. Life
b. Marine
c. Fire
d. None of these
Ans-A
40. …………….. reserve is created to meet any loss due to natural calamity
a. General reserve
b. Special reserve
c. Catastrophe reserve
d. None of these
Ans-C
41. Life insurance is contract of ………………………………….
a. Guarantee
b. Indemnity
c. Profit
d. None of these
Ans-A
42. General insurance is a contract of ………………………………
a. Guarantee
b. Indemnity
c. Profit
d. None of these
Ans-B
43. Double insurance is common in Insurance.
a. Life
b. Fire
c. Marine
d. None of these
Ans-A
44. Re insurance is generally found in Insurance
a. Fire
b. Marine
c. Life
d. None of these
Ans-D
45.Commission of an insurance company is shown in schedule
a. 2
b. 3
c. 4
d. None of these
Ans-A
46. To ascertain profit in life insurance business ………………. prepared.
a. Revenue account
b. Profit and Loss account
c. Valuation balance sheet
 d. None of these
Ans-C
47. ……………….. of an insurance company are shown in schedule 9.
a. Loan
b. Fixed asset
c. cash & bank balance
d. None of these
Ans-A
48. Insurance Act came into effect in ………………………………………..
a. 1938
b. 1956
c. 1949
d. None of these
Ans-A
49. The agreement of insurance is called as………
a. Policy
b. Premium
c. Annuity
d. None of these
Ans-A
50. The consideration in insurance for covering the risk is called………….
a. Claim
b. Premium
c. Annuity
d. None of these
Ans-B