Accounting For Insurance Companies Notes
Description
How to fill out Contract With Accountant To Audit Corporation's Group Medical, Disability, And Life Insurance Program?
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FAQ
If your Asset Disposal account has a profit in it, create a new revenue account called Gain from Insurance Claim. If your Asset Disposal account has a loss in it, create a new expense account, Loss from Insurance Claim.
Statutory Accounting Principles, also known as SAP, are used to prepare the financial statements of insurance companies. In the United States, authorized insurers are required to prepare financial information ing to SAP.
For example, if $10,000 of inventory is damaged in a fire and the proceeds are $7,000, the transaction should be recorded as a $7,000 debit to cash-fire damage reimbursement, a $3,000 debit to loss on insurance proceeds, and a $10,000 credit to inventory.
The following journal entry can be used to record the insurance claim: Debit: Insurance Claim Receivable (Assets) - Increase in the amount of insurance claim receivable. Credit: Loss on Damaged Goods (Expenses) - Record the loss incurred due to damaged goods.
At the end of any accounting period, the amount of the insurance premiums that remain prepaid should be reported in the current asset account, Prepaid Insurance. The prepaid amount will be reported on the balance sheet after inventory and could part of an item described as prepaid expenses.