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 Accounting  |  Question 134 of 151    Print  
Pre-Paid Insurance
How will you treat pre-paid insurance in balance sheet?


  
Total Answers and Comments: 1 Last Update: October 03, 2008     Asked by: saleemmba 
  
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October 02, 2008 22:32:33   #1  
vasudeo007 Member Since: July 2008   Contribution: 60    

RE: Pre-Paid Insurance
The words "pre-paid insurance" are self explanatory.

What is pre-paid insurance? The insurance that is paid in advance, before due date. This is treated like current asset.

The exact treatment is like this:

Whatever amount that is spent on insurance is shown in debit side of the Profit and Loss account the entry looks something like this:

                                          l inner columnl outer column   l
                                          l                     l                         l
To Insurance Account        l    Rs. xxx      l                         l
-Prepaid insurance            l    Rs. xxx      l Rs. xxxx            l

The balance amount is shown in outer column.

Now in Balance sheet the same item is shown as current asset. This particular "pre-paid insurance" should ideally come after sundry debtors.

Vasudeo

 
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 Related Questions

If i have paid for something why cant i expense the entire amount on the income statement?why do we need to make an adjustment to the insurance policy at the end of the year? wouldn't it have easier to record the entire balance as an expense in November when the policy was ?purchased?why do I need to take an inventory count of my supplies at the end of the year?If I receive the Hydro bill on August 5th, why don't we record the transaction for the next fiscal period rather then include
Read Answers (1) | Asked by : Nick

How will you treat pre-paid insurance in balance sheet? 
Latest Answer : The words "pre-paid insurance" are self explanatory.What is pre-paid insurance? The insurance that is paid in advance, before due date. This is treated like current asset. The exact treatment is like this:Whatever amount that is spent on insurance ...


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