Question

Goods destroyed by fire should be credited to ___________.

• A. goods lost by fire account
• B. sales account
• C. purchase account
• D. cash account

Answer 1

The correct option is C purchase account

When goods are destroyed by fire, then the "Loss by fire A/c" is debited and "Purchases A/c" is credited. The goods destroyed by fire is considered to be loss for the business and is classified as a nominal account. Therefore, according to the rule of nominal account, all the expenses and losses are to be debited. Hence, "Loss by fire A/c" is debited when goods are destroyed by fire and "purchases A/c" is credited.