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Ledger under which group


Surinder (Assistant)     03 June 2020

Surinder
Assistant 
 1 likes  119 points

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Sir.
we have issue cheque of national insurance co. for stock insurance please provide the name of group in which I creat the ledger of national insurance co.

avater

yasaswi gomes   03 June 2020

yasaswi gomes

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If you are paying premium on insurance, create a premium account in ledger.. 

If you are receiving a claim through cheque, there should already be a National insurance co. (debtor/receivables) Ledger. 

The above is correct because you don’t need a provision for insurance as the occurrence of claims is very rare. Next, since prepaid insurance is a real asset, create a separate account if you want to keep track of the expenses under current assets. Then add insurance premium account to indirect expenses account 

 

Surinder (Assistant)     03 June 2020

Surinder
Assistant 
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Sir

we issued the cheque Rs.9200 and the same has been cleared from bank but due to policy conditions we have cancelled the insurance. after 2 weeks we have got refund Rs.8100 so please provide the name of group for adjustments

avater

yasaswi gomes   03 June 2020

yasaswi gomes

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@ Surinder

Please find out under what accounts you have purchased the insurance account then derecognise the prepaid insurance.

when you purchased:

Insurance expense a/c 9100₹ income statement

Payables a/c 9100₹ balance sheet liabilities

once you received your policy and cheque is cleared

Insurance a/c 9200 balance sheet current assets

Bank a/c 9200 balance sheet current assets

when you cancelled it and received a refund,

Bank a/c 8100₹ Balance sheet current assets

Loss on insurance 1100₹ Income statement profit and loss account

To Prepaid insurance 9200₹ Balance sheet current assets

 

 

 

avater

sabyasachi mukherjee   09 June 2020

sabyasachi mukherjee

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Gomes
once the customer receives the policy..
in his books
not correct reflection.

avater

yasaswi gomes   09 June 2020

yasaswi gomes

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@ Mukherjee

If you use accruals, which is the case, there is no other entry which best suits the scenario here. Usually, ERP’s commonly use purchases, expenses, capital,cash/bank and insurance ledgers. Supposing, if you purchased it with cash

Insurance a/c

To cash a/c

but how will one record the expense? 

Insurance expense a/c

To Insurance co. a/c

then to recognise an asset, its

Insurance co. a/c

To Cash a/c

this insurance co. is treated as Sundry creditors which is again related to payables or suppliers account. It depends upon what ledger accounts people use. 


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