Insurance

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student (Querist)
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08 March 2016 Vehicle is being used for business purpose but in the name of partner.Whether its insurance be debited in partners name or business name in tally??

student

student (Querist)
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08 March 2016 *purchased in the name of partner

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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01 August 2024 When a vehicle is purchased in the name of a partner but used for business purposes, the treatment of the insurance premium in your accounting records should follow these principles:

### **1. Accounting for the Vehicle and Insurance Premium:**

**Insurance Premium:**

- **If the Vehicle is Purchased in the Partner's Name:**
- Even though the vehicle is purchased in the partner's name, since it is used for business purposes, the insurance premium should be treated as a business expense.

- **Accounting Treatment in Tally:**
- **Debit:** Insurance Premium Account (under Business Expenses)
- **Credit:** Bank/Cash Account (or the account from which the payment was made)

### **Example:**
1. **Record the Insurance Premium Payment:**

- **Date:** [Date of Payment]
- **Debit:** Insurance Premium Account (e.g., `Insurance Premium - Vehicle`)
- **Credit:** Bank Account (or Cash Account, depending on the payment method)

2. **If the Vehicle's Cost is Recorded:**
- If the cost of the vehicle was recorded in the books, you may need to ensure that the depreciation and other related expenses are also accounted for.

- **Asset Account:** Vehicle Account (in the partner’s name, but noted as a business asset)
- **Expense Account:** Insurance Premium Account

### **2. Partner’s Account vs. Business Account:**

- **Partner’s Account:**
- The vehicle is in the partner’s name, so if you need to track the vehicle's cost or depreciation, it should be recorded against the partner's account or a specific asset account for the vehicle.

- **Business Account:**
- The insurance expense related to the vehicle used for business should be debited to a business expense account, as it is a business-related cost.

### **3. Additional Considerations:**

- **Reimbursement to Partner:**
- If the insurance premium is paid by the partner personally, you should record a reimbursement entry to reflect that the business is compensating the partner.

- **Debit:** Partner’s Loan/Current Account (if applicable)
- **Credit:** Bank Account (or the account from which the reimbursement is made)

### **Summary:**

In Tally, even though the vehicle is purchased in the partner's name, the insurance premium should be debited to the Insurance Premium Account (business expense) because it is related to business use. Ensure that the vehicle's details are properly recorded, and any reimbursements to the partner are appropriately managed in the books.

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