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    Question

    According to AS-2 on Valuation of Inventories, abnormal

    loss is treated as ______
    A Part of cost of inventory Correct Answer Incorrect Answer
    B Capital expenditure Correct Answer Incorrect Answer
    C Expense charged to Profit & Loss Account Correct Answer Incorrect Answer
    D Extraordinary item shown below P&L Correct Answer Incorrect Answer
    E Deferred revenue expenditure Correct Answer Incorrect Answer

    Solution

    AS-2 clearly states that abnormal losses (like fire, theft, etc.) are excluded from inventory cost and are charged directly to the Profit & Loss Account as an expense.

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