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Request: Teach me how to face and understand it
Scenario:
Looking at a trial balance,
In the trial balance i see
The following information has been extracted from the book of JP.co, a limited liability company, as at 31st October 2006
————————————————————————————————————–
Insurance Dr.75000Required;
Prepare P&L statement for the year end of 31st october 2006The “DILEMMA” im facing is to understand whether it is asset or expense.
Please help me.
TYInsurance is an expense.
I really do suggest that you watch my free lectures. They are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
Sir , could you tell me in which exact chapter i would find info about this please.
There is no specific chapter on insurance because insurance is dealt with in the same way as all expenses!
Double entry bookkeeping is dealt with in Chapter 3 – I work through an example writing up all the t-accounts, extracting a trial balance, and preparing the Statement of profit or loss (we stopped calling it a P&L account many years ago) and preparing the Statement of Financial Position.
However, you cannot really study by picking chapters at random – you should work through the entire course in chapter order. (Also, you should not use the lecture notes on their own – they are to be used with the free lectures. It is in the lectures that I explain and expand on the notes.)
In that case you could help me save some time searching all the videos for insurance.
I just want to know why insurance is expense and not current asset.Insurance is an expense of running the business, that you pay each year. You don’t own anything and you are not owed anything, so it is not an asset.
Sir , since im a student im hindered by these assumptions cause i dont know what is fact and what is not. The only reason i pleaded you is because your a certified teacher here. Its always a good feeling when i find facts out of the assumptions looming in my overthinking mind sir. Now that you cleared my doubt with a fact i can proceed to apply this. once again as always, truly ty for your patience and help sir. I highly appreciate it.
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