ECONOMICS

Detailed explanation-1: -These are called as normal losses. Over and above the normal loss, balance units of loss are considered as abnormal loss which should be charged to profit & loss account.

Detailed explanation-2: -In process costing, the abnormal loss is treated as cost and is written off to the profit and loss account.

Detailed explanation-3: -Abnormal loss (a cost) is credited to the process account: abnormal gain (a benefit) is debited to the process account. The equal and opposite entry is in the abnormal loss/gain account, subsequently transferred to the income statement.

Detailed explanation-4: -From an accounting viewpoint, abnormal loss is said to be the loss that has occurred over and above the normal loss and is detrimental to the business. These causes should be identified and resolved as early as possible so that the company can minimise the damage and the associated losses.