Question

Paid by cheque ₹ 6000 as fire insurance premium for period of 12 months

Answer 1

Answer:

Fire insurance premium A/C Dr..... ₹6000

To Bank A/C ₹6000

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Answer 2

Answer:

Fire Insurance A/c    Dr  6000

      To Bank A/c                    6000

Explanation:

Fire insurance premium being paid is an expense and will be treated by nominal accounts rule. Debit all expenses and losses.

Since payment is being made by cheque thus bank account will be credited.

Fire insurance is done in order to receive assistance in form of money if there is loss in business due to fire.