ECONOMICS

Detailed explanation-1: -Normal losses are expected as they occur at the normal process of production. In contrast, abnormal loss is unexpected, as they arise due to inefficiencies in the production process and can be avoided when the production environment is efficient. When normal loss is physical, i.e. as a scrap.

Detailed explanation-2: -The normal loss means a loss which is inherited and can not be avoided. It should also be considered while valuing the closing stock.

Detailed explanation-3: -A loss which occurs normally during the process of production is called as normal loss. When actual loss is less than the estimated loss it is considered as abnormal gain.

Detailed explanation-4: -The loss is borne by the consignor since, in the consignment model of business, ownership of goods stays with the consignor and does not pass to the consignee. The loss on consignment must be characterised as normal or abnormal in order to determine the right accounting treatment in the consignor’s accounts.