SBI life insurance

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This discussion clarifies the proper accounting treatment for SBI Life Insurance payments. For personal insurance of a proprietor or partner, the recommended entry is to debit the drawings account and credit the bank account. At year-end, the drawings account balance should be transferred to the owner's capital account. Importantly, personal insurance expenses cannot be recorded as a business liability.

Sumit Arora

Sumit Arora (Querist)
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02 April 2020 Dear Sir, we have issued the cheque for SBI life insurance on 02. 04.2020 Please advise to me below is the right method of entry

CAPITAL A/C. DR. 31.03.20
SBI INSURANCE PAYABLE CR. 31.03.20

or any entry please suggest in books of account.

CA ARPIT BANGA

CA ARPIT BANGA (Expert)
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02 April 2020 Its just like drawing capital from business . In this case use the below instructions.
debit to the drawing account and a credit to Bank Account
At the end of the accounting year, the drawing account is closed by transferring the debit balance to the owner's capital account