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Question

Full claim accepted by insurance Company on the loss of goods by fire is credited to ____________ A/c.

A
Trading A/c
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B
P/L A/c
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C
Insurance Company
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D
None
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Solution

The correct option is A P/L A/c
Journal Entries to be passed when insurance claim is accepted by insurance company on loss of goods by fire :

Loss by fire A/c. Dr.
To trading A/c
(Being purchase account decreased)
Insurance claim A/c. Dr.
To loss by fire A/c
(Being ins. claim lodged and loss by fire account nulified)
Bank A/c. Dr.
P&L A/c Dr.
To insurance claim A/c
(Being claim settled)

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