SOFE SOFE Certification SOFE-CFE Questions & Answers

• Question 381:

  What is defined as the difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years?

  A. permanent difference

  B. temporary difference

  C. deferred tax difference

  D. None of the above

  Correct Answer: B

• Question 382:

  The change in reserves equals the gross losses unpaid (liability) at the end of the period less net unpaid losses at the beginning of the period.

  A. True

  B. false

  Correct Answer: B

• Question 383:

  A __________________ refilects the actual profit developed under the contract.

  A. Actual commission

  B. Service commission

  C. contingent commission

  D. miscellaneous commission

  Correct Answer: C

• Question 384:

  Income is usually measured by premium earned while outgo is the sum of losses and loss adjustment expenses incurred, commissions incurred, and an expense fee.

  A. True

  B. False

  Correct Answer: A

• Question 385:

  Which of the following provides specific information regarding reinsurance assumed and ceded, is an integral part of the Annual Statement?

  A. Schedule A

  B. Schedule D

  C. Schedule F

  D. Schedule H

  Correct Answer: C

• Question 386:

  What are defined as losses paid plus the change (positive or negative) in outstanding loss reserves within a given period of time?

  A. Incurred losses

  B. reassumed losses

  C. ceded losses

  D. reinsured losses

  Correct Answer: A

• Question 387:

  Which of the following is Correct?

  A. Unearned premiums are calculated by simply taking the sum of the assumed written for the period plus the unearned premium reserve (liability) at the beginning of the period less the unearned premium reserve at the end of the period.

  B. Earned premiums are calculated by simply taking the sum of the premiums written for the period plus the unearned premium reserve (liability) at the beginning of the period less the unearned premium reserve at the end of the period.

  C. Earned premiums are calculated by simply taking the sum of the premiums written for the period plus the earned premium reserve (liability) at the beginning of the period less the earned premium reserve at the end of the period.

  D. Earned premiums are calculated by simply taking the sum of the premiums written for the period plus the unearned premium reserve (liability) at the beginning of the period more than the earned premium reserve at the end of the period.

  Correct Answer: B

• Question 388:

  What may be determined as a percentage of the subject base premium, a flat rate, or a rate developed by the reinsured's loss experience?

  A. Reinsurance income

  B. Written premiums

  C. Premiums

  D. Loss reserving practices

  Correct Answer: C

• Question 389:

  Because premiums for a reinsurer typically are not fully earned when received, provision is made for recording premiums in which of the following stages of development?

  A. reinsurance premiums, earned premiums, and unearned premiums

  B. written premiums, assuming premiums, and unearned premiums

  C. recorded premiums, revenue-generated premiums, and ceded premiums

  D. written premiums, earned premiums, and unearned premiums

  Correct Answer: D

• Question 390:

  A retrocession is a transaction whereby a reinsurer, called the retrocedent, cedes to another reinsurer, known as the retrocessionaire.

  A. True

  B. False

  Correct Answer: A