our office have office insurance Rs.6,590/- and our office assistant accident insurance Rs.165/- for one year premium. please tell me how the amount calculate on above mentioned insurance prepaid insurance with full details how calculate the days, insurance period valid from 1.03.2009 to 2.03.2010 for my knowledge.
U hv to make provision for prepaid insurance for the period which falls in next accounting year.
E.g. ur accounting yr is from 1.4.08 to 31.03.09
Now u hv paid premium for 1.3.09 to 2.03.10. It means that in ur a/c period only the march month falls for which u can claim ins premium paid. period of 11 mths(from 1.4.09 to 2.3.10) is falling in next yr for which u hv to make provision.
A/c entry wil be as follows:
1) Office Ins a/c dr.6590 To Bank/cash a/c 6590 (being office ins paid for the period 1.3.09 to 2.3.2010)
2) Prepaid Ins a/c dr.6041 (6590*11/12) To Office Ins a/c 6041 (being prov. for prepaid ins. for the period 1.4.09 to 2.3.2010 made)
3) P & L a/c dr. 549 (6590-6041) To Office Ins. a/c 549 (being office ins a/c transferred to P & l a/c )
Same entries to be made for office assitant accident insurance.
In short u can claim any exps for those period only which falls under ur accounting period.
Hope u r cleared now.
Have a nice day!!! *** Prepaid ins wil be shown in balance shhet under the head of "loans & advances" at the asset side.
CAclubindia
