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Bhavay Agarwal (Querist)

02 January 2019 If insurance premium is given as ₹20,000 in receipt and payment a/c and information is
Three months premium paid in advance
Then what amt. Will be taken in income and expenditure a/c?

Kamal Kant Mittal

Kamal Kant Mittal (Expert)

03 January 2019 It is simple calculation of 20000 being insurance premium for 3 months and hence for financial year it would be 80000.
so you should record 80000 as expense in income and expenditure account.

Regards
CA Kamal Kant

Bhavay Agarwal

Bhavay Agarwal (Querist)

04 January 2019 Sir you misunderstood the information, 20000 is given as insurance premium in receipt and payment a/c and one of the adjustments of a full fledged question of npo is three months premium paid in advance. So basically my query is 20000 we will take for 12 months or 15 months..... Because according to answer we should take it 12 months but why shall we take it 12months and not 15 months when receipt and payment a/c is made on cash basis...

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

19 October 2021 If you are following cash accounting method, take full amount as expenditure; otherwise amortize 3 months' premium amount as advance paid.

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