Ledger under which group

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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.
Replies (5)

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 

 

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

@ 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

 

 

 

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

@ 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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