LOSS OF MATERIAL

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Can any one tell me solution , Journal entries, how to show in financial statement and effect on financial statement  

1 ) if Loss Due to Material Converted in Scrap.

2) If Loss Due to Process which is unrecoverable. ( by the nature of item or by the normal process of manufacturing)

3) if Loss due to Fire or Theft.

4) if Loss in Transit at the time of purchases and at the time of sales.

5) if Loss in Godown.

6) if found Physical stock is less than Book Stock.

7) what is the difference between Normal and abnormal loss and how to show in Financila Statements and effect of normal loss as well as abnormal loss on financial statement.

Replies (1)

normal loss: we dont show it in financial statemaents...it is due to nature of material.. which cannat be avoidable.. for example if u purchase 1000 ltrs of oil for 10000 rupees... and due to leakage 100 litrs were loss... then u have disclose it as oil purchased 9000 ltrs for 10000 rupees...

abnormal loss: it is avoidable and due to abnormal reasons like accident in factory, fire in factory, goods theft ... we have to shoe them in financial statements..

show total loss in trading A/c credit side... and if is covered by any insurance then unrecoverable loss we hav to show in profir and loss Ac...


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