October 30, 2016 admin

Insurance—Excluding Building & Employee

Expenses

INSURANCE—EXCLUDING BUILDING & EMPLOYEE EXPENSE ACCOUNT
8620

ACCOUNT EXPLANATION
Expense of insurance not otherwise provided for in this Manual; such as, insurance on merchandise inventories and building contents, liability insurance, fidelity bonds, burglary insurance and business interruption insurance.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Monthly write-off of prepaid garage liability insurance SE
    Insurance—Excluding Building & Employee 8620
      Prepaid Insurance 1510
COMMENTS
  • Workmen’s compensation insurance premiums should be charged to Account 8040, Employee Benefits.
  • Insurance premiums are usually payable in advance and cover one or more years. They should be debited to Account 1510, Prepaid Insurance, and prorated to expense monthly.
  • For departmentalization purposes, insurance applicable to the property or activity of a specific operating department should be charged to that department. Insurance applicable to the property or activities of the total dealership should be distributed as provided in Departmentalization.