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Determinants of Money Supply

Insurance cla...

Question

Insurance claim for loss-in-transit received by consignor is _________________.

A

Credited to Bank Account

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B

Debited to Insurance Co.

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C

Credited to Abnormal Loss Account

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D

Debited to Consignment Account

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Solution

The correct option is C Credited to Abnormal Loss Account
A loss by theft or losses by fire, flood, earthquake, war, accidents, in transit, etc. are abnormal losses. These losses are avoidable and not inherent in nature. These losses reduce the value of closing stock as well as profit.
After finding out the value, credit the Consignment A/c and debit the Abnormal Loss A/c.

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