322 – Insurance Payable

Current Liabilities

Accrued Liabilities

Synopsis

Account 322

Debits

Credits

  1. Payments of premiums accrued in this account.

  2. Any adjustment to reduce the accrual balance to actual liability.

  1. The monthly accrual for premiums on all insurance coverage.

  2.  Any adjustment to increase the accrual balance.

 

Remarks:

The balance in this account represents the total estimated premiums (subject to future determination) covering insurance, for which payment will be made in a future accounting period.

Periodic examination should be made of all insurance policies to assure adequate coverage and eliminate duplicate or unneeded coverage.

Typical insurance coverage’s which may be accrued in this account include vehicle inventories, garage liability, contents, and worker's compensation.

The entry to record the monthly accrual of premiums payable should be recorded in a standard entries journal.

A schedule should be maintained on all prepaid and accrued insurances, fully describing each insurance policy in force.

The balance as shown in the accrued insurance schedule should agree with the balance in this account each month-end.

It is advisable to retain all insurance policies in a "fire-proof" safe or vault.

Note: