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Doubt regarding loss of goods to fire?

Akshay Dwivedi (Student CA IPC / IPCC) (79 Points)

03 November 2014

In the textbook it says that if goods are lost by fire, an entry has to be made:

Loss by fire a/c Dr.

To Trading Account

My question is, why is loss by fire a/c debited, and not credited? Why is trading account credited? Please explain using golden rules of accounting if possible.

Another doubt not related to the question is: If I clear IPCC, will it add value to my CV or do I compulsorily have to give all the exams in order for it to be beneficial to me?

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8 Replies

Salil (Student CA CPT ) (31 Points)
Replied 05 November 2014

First of all goods destroyed by fire are credited to trading account . If there is an insuarance claim then it is written in the asset side of the balance sheet and the difference between the two is the actual loss which is debited to profit and loss account . It is debited since it is an expense . You can reduce the amount of goods destroyed by fire from purchases or u may credit the trading account

Akshay Dwivedi (Student CA IPC / IPCC) (79 Points)
Replied 05 November 2014

Thank you. Please answer my second question as well

Salil (Student CA CPT ) (31 Points)
Replied 05 November 2014

I dont think that ipcc by itself will add much to your cv . Once u enter the course you must complete the course ,you should not be disheartened by faliure

Akshay Dwivedi (Student CA IPC / IPCC) (79 Points)
Replied 05 November 2014

Thank you for answering. I have a few more doubts:

In three column cash book, how will the following transactions be entered:

Jan 15th - Received cheque for Rs. 950 from Lucky and allowed him discount Rs. 50

Jan 19th - Paid into bank Lucky's cheque for Rs. 950

Jan 27th - Lucky's cheque dishonoured.

I have no problems with the first two entries (ie. Jan 15th and Jan 19th) but how do I enter the Jan 27th transaction? Keep in mind that a discount of Rs. 50 is also involved.

My second doubt is:

In double column cash book, how do you enter the following transaction:

Jan 27th - Paid by cheque for cash purchase - Rs. 275