journal and ledger.

  1. Insurance premium paid.
    Insurance a/c dr
    To bank a/c

  2. Goods lost in fire. Insurance claim fully accepted.
    Insurance claim a/c dr
    To loss by fire a/c

Will the account of insurance in 1. and 2. case be same or not..?? explain with reason...

asked Jan 11, 2017 in Journal Entries by cute shanaya (18 points) 1,274 views

1 Answer

0 votes
The first journal entry is about making payment for buying Insurance Policy.  In this entry insurance is an expense. When goods are lost due to fire, we file a claim with the inssurance co. demanding the insured amount.  Till money is received against this claim it is shown in the Balance Sheet as an asset.  It is an asset because it represents the amount receivable from the insurance co.
answered Jan 11, 2017 by jbsclasses (3,971 points)
U didn't understand my question..

will the ledger account of insurance be same??? this is my question.
My answer above is clearly indicating that 'Insurance A/c' is an expense A/c and 'Insurance claim' is an asset account.  This simply means that both the accounts are different and not same.