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    Question

    The abnormal loss is debited to following

    accounts: 
    A Consignment Correct Answer Incorrect Answer
    B General Profit and Loss A/c Correct Answer Incorrect Answer
    C Consignee Correct Answer Incorrect Answer
    D Insurance company Correct Answer Incorrect Answer

    Solution

    In consignment accounting, losses are classified as: • Normal Loss → Not recorded separately • Abnormal Loss → Loss beyond normal expectations (e.g., accident, theft, fire) Abnormal loss must be recorded separately, and its effect is ultimately transferred to the General Profit and Loss Account. Why not the other options? • Consignment A/c → used to record normal consignment expenses, not abnormal loss. • Consignee → not responsible for abnormal loss unless negligent. • Insurance Company → if a claim is admitted, the insurance proceeds reduce the loss but are not debited for the loss itself.

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