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      Question

      As per Section 20(1) of the General Insurance Business

      (Nationalisation) Act, what does the acquiring company do with the balance of profit after making necessary provisions relating to bad and doubtful debts, depreciation in assets, welfare etc.?
      A Invests in new ventures. Correct Answer Incorrect Answer
      B Distributes it as dividends Correct Answer Incorrect Answer
      C Uses it for employee bonuses Correct Answer Incorrect Answer
      D Pays off external debts Correct Answer Incorrect Answer
      E Allocates it for research and development. Correct Answer Incorrect Answer

      Solution

      Section 20.   Balance of profit how to be utilised: (1) After making provision for bad and doubtful debts, depreciation in assets, provident, superannuation, welfare and other funds, debts due to Government and all other matters for which provision is necessary under any law or which are usually provided for by insurance companies, every acquiring company shall distribute the balance of profit as dividends.

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