Question

treatment of life insurance premium in final accounts​

Answer 1

Answer:

Life insurance premium is treated as drawings of the proprietor and is added up in drawings and deducted from capital in the balance sheet.

Answer 2

The answer is deducted from capital:

Explanation:

• The proprietor's life insurance premium is classified as a drawing, which is added to drawings and deducted from capital on the balance sheet.

• The amount of prepaid insurance premiums should be reported in the current asset account,
• Prepaid Insurance, at the end of each accounting period.
• After inventory, the prepaid amount will be reported on the balance sheet as part of an item called prepaid expenses.