Where we have to take entry of Insurance Premium in Acc ?

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Murtaza I Bhagat (Querist)

09 August 2009 Dear sir/s
what is the right entry of Insurance Premium of any Individual having Profit/income from Business/Profession ?
1) Do we take LI Prem to Capital A/c ? Can We reduced the account of Capital ?
Pls tell me which is right
(A) Capital A/c Dr.
Cash/Bank Cr.
(Nr. Payment of Insuarnce Premium)
(B) Insurance Premium (Assets) Dr.
Cash/Bank Cr.
(Nr. Payment of Insuarnce Premium)

Afterthen Pls tell me if Insurance Premium for ULIP Plan and we will be refundable the amount after the Maturity of Plan when we have to take those amount in Entry.

Most imp :- Pls tell me where we have to take the Premium Payment Amount & Refunded Amount Difference in Accounts on the above case.

Pls guide me in that matter
pls send me any file on my emil ID related to this Query
my Email ID is murtaza_bhagat786@rediffmail.com

Thanks for your advise in Advance

Kaushal Jha

Kaushal Jha (Expert)

10 August 2009 Payment of LI Premia has to be debited in Capital Account as this is not business expenses. As such, it would not be debited in P&L A/c. Hence, your first entry is right one.

On maturity or on money back, the receipt would be creditedd to capital account as Maturity Receipt or Survival Benefit Receipt as the case may be.

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