what is the journal entry of life insurance paid
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The Current transaction affects two accounts life insurance premium account(it is a nominal account;all losses Gains income expenses come under nominal account; life insurance premium is an expense),, Bank/cash account.. because life insurance premium is paid in Cheque/cash ...(it is a Real account; all assets and Liabilities come under Real account; bank balance/cash balance is an asset) ..
The Three golden rules of accounting are....
Personal Account: Debit the receiver, credit the giver
Nominal account: Debit All expenses and losses, credit All incomes and gains
Real Account: Debit what comes in ,credit what goes out
In contention with the above rules...
life insurance premium should be debited (it is a nominal account/its an expense)
Bank/cash account should be credited (it is a Real account/cash from bank is Going out)
The Journal Entry will be....
life insurance premium a/c Dr xxxxx
To cash/Bank a/c. xxxx
(Being life insurance premium paid)
The Three golden rules of accounting are....
Personal Account: Debit the receiver, credit the giver
Nominal account: Debit All expenses and losses, credit All incomes and gains
Real Account: Debit what comes in ,credit what goes out
In contention with the above rules...
life insurance premium should be debited (it is a nominal account/its an expense)
Bank/cash account should be credited (it is a Real account/cash from bank is Going out)
The Journal Entry will be....
life insurance premium a/c Dr xxxxx
To cash/Bank a/c. xxxx
(Being life insurance premium paid)
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if u paid premium then,
life insurance premium a/c dr.
to bank a/c
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