Download to read offline
More Related Content
Similar to Insurance Claim Accounting
More from Dr Yashodhan Mithare
Insurance Claim Accounting
- 1. Haribhai V. DesaiCollege, Pune 411002 Department of Commerce E- Content Development Cell Third Year B. Com. Insurance Claim Accounting (Loss of Profit Claims) Designed by Dr. Yashodhan Mithare
- 3. Destruction of stock andother assets Effect on regular functioning of business Dislocation (Stoppage) of business activities Failure to achieve normal business Reduction in sales Rent, Salary, Electricity bill, interest on loan need to be paid Significant decrease in profit All these losses need to be compensated through ‘Loss of Profit’ Policy
- 4. Indemnity Period Short Sales GrossProfit Ratio Annual Turnover Standard Turnover Standing Charges Average Clause Important Terms
- 8. Annual turnover or salesin the preceding year are required for application of average clause
- 9. Standard Turnover 150000 ActualTurnover 100000 Short Sales 50000
- 10. Standing Charges Salaries and wages to staff Rent, Rates& Taxes Interest on loans / debentures Auditor Fees Travelling Expenses Director Fees Standing charges refer to those fixed expenses which are incurred irrespective of the reduction in turnover. Standing Charges
- 11. Gross profit Percentage = Net profitfor the previous year + Insured Standing charges of last year Sales in the previous accounting year 100X Gross Profit percentage is used to calculate the actual amount of profit lost by the enterprise due to short sales
- 12. Calculate Short Sales Calculate Gross Profit Percentage Calculate lossof profit Calculate insurance cover required Apply Average Clause Steps to solve the problem
- 13.