here is a general ques to ca students... if loss in the company decreases the profits if the company then why abnormal loss is put on the credit side of consignment account or we can say branch account or trading account. and we increase the profits due to abnormal loss.... think about this.............. use ur brain and ask ur teachers........
Abnormal Loss doesnot increase your profits in any way. It is just for the purposes of disclosure that we give it on the credit side of trading account or any account for that matter.The amount of loss shown on the credit side of trading account represents the extent to which stock has got reduced, not by sale but by loss. This Abnormal loss which is shown on the credit side of Trading account is subsequently debited to profit & loss account to give effect to the loss.
If you know the reason, please let us know.It would be very useful. If you want to wait and see who is going to give out hte correct answer, then, atleast Private Message me the answer.Thanking you.
If you know the reason, please let us .It would be very useful. If you want to wait and see who is going to give out hte correct answer, then, atleast PM me also the answer.Thanking you.
CAclubindia
