COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Value is credited to process loss a/c
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Scrap value is credited to process loss a/c
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Balance in abnormal loss a/c is transferred to costing profit & loss a/c
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None of these
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Detailed explanation-1: -Treatment of Abnormal Loss in Process Accounts If you use bad quality raw material in the production, there is big risk of wastage in production. So, use of bad quality raw material is the reason of abnormal loss. 2. Careless is also reason of abnormal loss.
Detailed explanation-2: -Accounting for Abnormal Loss Abnormal loss causes monetary loss for the business and therefore be classified as an expense and presented in the profit and loss statement.
Detailed explanation-3: -An abnormal loss is a cost to your business. It should therefore be treated as an expense and shown on your income statement. When you sign up to one of Debitoor’s larger plans, not only can you track your expenses, but you can also generate profit and loss reports based on the data that you provide.
Detailed explanation-4: -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.