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Question
What is the accounting treatment for insurance premium paid on the life of the proprietor?
Short Note
Solution
The proprietor has to pay an agreed premium on a monthly or annual basis. The amount should be treated as prepayment which is considered a current asset.
The following entry should be made:
| Date | Particulars | LF | Dedit M. | Credit M. |
| Insurance A/c .............. Dr. To Cash/Bank A/c (Being insurance premium paid.) |
XXX - |
- XXX |
shaalaa.com
Transaction
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