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Insurance paid

gaddala ramesh (163 Points)

24 May 2023

max life insurance paid is capital or expenditure

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3 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14151 Points)
Replied 24 May 2023

Life Insurance is personal expenses, paid from business will be Debited to Capital A/c of Sole proprietor .

Max Life Insurance A/c Dr
Cash. A/c / Bank Cr
( paid for life insurance from Business)

Capital A/c Dr
To Max Life Insurance Cr
( Transfer entry)

sabyasachi mukherjee (25983 Points)
Replied 25 May 2023

Insurance paid is a revenue expenditure except for other cases where it forms part off cost or capital expenditure.

prasad Nilugal ( GST Practitioner & Accounts ) (14151 Points)
Replied 25 May 2023

If Company paid Insurance primium on behalf of employee, then it's revenue expenditure to Company and will be debited to P & L A/c otherwise Life Insurance is personal expenses .