Question

Insurance premium Rs.20,000 prepaid insurance premium Rs.3000.

Calculate the insurance premium to be debited to Income &

Expenditure A/c​

Answer 1

Answer:

20000 - 3000 = 17000

Explanation:

insurance - prepaid

Answer 2

GIVEN:  Insurance premium = 20,000 ; Prepaid insurance premium = 3,000

TO FIND: Premium debited to income and expenditure account

SOLUTION:

• Income and expenditure is an account that is prepared by a nonprofit organization.

• Their motive is to maximize social welfare.

• As in receipts and payment account we write everything which we have received during the year.
• In the income and expenditure account we write the income and expenditure which are for this year.
• Prepaid insurance premium means that it is for the next year and we have paid this in the current year.

Amount to be debited = Insurance Premium - Preapid

                                 = 20,000 - 3,000

                                 = 17,000

The insurance premium to be debited to Income and expenditure will be 17,000.