Question

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

A

Trading A/c

B

P/L A/c

C

Insurance Company

D

None

Medium

Solution

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Correct option is B)

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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