UK Accounting Treatment for Insurance

[Tony Mehmet]

Hi,

I have a bit of an issue with how to account for my Business insurance.

I pay for insurance monthly and they have sent me a current statement, which is as follow;


Debit Credit
Opening Balance including - £737.00
-Transaction amount - £655.10
- Transaction fee -£81.90

Direct Debit Collection -£73.70


Would it be correct for me to just
DR Insurance 73.70
CR Cash/Bank 73.70

or do I need to put the £737.00 as a short term liability and go down that route

Thanks

 

[Fidget]

Just record as it happens. It's a monthly amount for the same amount, so treating it as an accrual wouldn't make any difference to the numbers in your accounts, but it would be a bit more work every month.

The rule of thumb here is to go with the method that requires the least effort where there is no impact on the financial statements.

 

[Tony Mehmet]

Thank you, Thats what I decided to do just wanted confirmation.