Part 2: A story of death and taxes
Last week I shared a discussion in a LinkedIn group that I came across. Basically a member of the LinkedIn group asking his fellow accounting enthusiasts about how to report money that an insurance company pays to his client.
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How did our readers suggest Jacob deals with his accounting records?
I think Jacob should record it as liability (payment in advance). He should recognise the revenue or loss when the funeral home performs services.
The insurance company receives the premiums. The transaction is for the insurance company's record. Jacob's Funeral Service provider does not have to make a note or record of the premium contributed.
Upon death of the premium contributor, Jacob's Funeral Service will provide the funeral service, upon the authorisation, by the Insurance Company to provide a service. The funeral provided by service provider, will charge to the Insurance company (that had received the premiums) for payment by the service provider. This will be recorded as revenue in the books of the Funeral Service' provider.
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Look out for the next time I request feedback from you. You never know – it could be your wise words published for our thousands of readers to appreciate.
Until next time,
Managing editor, Practical Accountancy Loose Leaf
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Note: 5 of 1 vote