In this guide, we address a situation where an accident has occurred, and the costs are partially or fully covered by insurance. Since the most common incidents involve vehicles, the example here uses the car expenses account.
\nIn cases where input VAT on car expenses is recoverable at 50%, the insurance company must also be informed. In such cases, the insurance will reimburse 50% of the VAT, which would normally be considered a company expense.<\/p>\n
There are two options for insurance reimbursement of costs:<\/strong><\/p>\n Enter the repair invoice under Operations <\/b>-> Purchase<\/strong> invoices<\/strong> as usual, using the expense account 5420<\/strong> Car maintenance and repairs<\/strong>\u00a0(or another account typically used for car repairs in the company). The purchase invoice is paid<\/strong> to the repair shop by<\/strong> the company<\/strong> by the agreed-upon due date.<\/p>\n The insurance<\/strong> reimbursement amount is received in the bank account. This transaction is recorded as a financial<\/strong> transaction<\/strong>:<\/p>\n Debit 1020 Bank account Since the money received from the insurance is not income but a cost reimbursement, this transacion offsets the expense in the income statement. Enter the repair invoice under Operations <\/b>-> Purchase<\/strong> Invoices<\/strong> as usual, using the expense account 5420<\/strong> Car maintenance and repairs <\/strong>(or another account typically used for car repairs in the company). The company is responsible for paying the VAT portion<\/strong>. Record the VAT amount as paid from the bank account in the usual manner.<\/p>\n Mark the repair cost<\/strong> as paid with the “Settlement of Accounts<\/strong>” account, and you can use the purchase invoice date as the payment date. Open the financial transaction for the payment and replace account 9999<\/strong> Settlement of Accounts <\/strong>with account 5420 Car maintenance and repairs<\/strong>.<\/p>\n Since the money received from the insurance is not income but a cost reimbursement, this transaction by changing the account offsets the expense in the income statement. The invoice is also correctly marked as paid.<\/p>\n Essentially, you could also create a separate
\nFor VAT type, select either 24% Car costs (100% business use) or 24% Car costs (partial business use), as appropriate. If the company is not VAT liable, the amount including VAT is posted to the expense account.<\/p>\n
\nCredit 5420 Car maintenance and repair<\/p>\n
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\nFor VAT type, select either 24% Car costs (100% business use) or 24% Car costs (partial business use), as appropriate.<\/p>\n