Advanced accounts problem!!!

Accounting Entries 1278 views 4 replies

Rohan Maakan

Semi Qualified Assistant

88 Points Posted on 08 October 2012

Hey guys. A friend of mine is preparing for giving grp 2 in november. And he faced a problem while going through the topics of Financial Statements of Insurance Companies.

If you guys can plzz help me out. When we are attempting questions regarding Premiums,

like its given in the question that

Premium - 100000

Reinsurance Premium- 20000

now in this case wat do i assume? I mean is this reinsurance premium ceeded or accepted??

In one book i saw that they have assumed it to be ceeded. But still they haven't given any explanation. So i need a confirmation before i can form an opinion. plzz help.

Replies (4)

Krishna Kanta Som

CA FINAL STUDENT

132 Points Posted on 08 October 2012

Premium of rs 20000 is reinsurence accepted.If q is silent then always takes it accepted.

any other query -9832228448

Yash Gokani

Article Assistant

47 Points Posted on 08 October 2012

According to me,if the question is silent,it should be assumed as re-insurance ceded

Rohan Maakan

Semi Qualified Assistant

88 Points Posted on 09 October 2012

Hey guys. Thanks for the replies. I don't wanna offned any1, but I really need a confirmation. Two of you have given me different answers.

Krishna even i thought it should be reinsurance accepted. But in that book they have taken it as ceded. But they haven't given any working note or any note to say that. They have jst shown how Premium Earned(Net) wil be calculated. So they deducted 20000 from 100000.

And yash i agree wid u but i still wanna be sure. Becuase there is no guidance from our institute and when such a question comes in exam they will tell us that i was a little tricky, even though there is no trick. Its just a matter of taking the right assumption.