Explain the reasons or purposes of computing the value of goods lost in a fire or by theft and how should we compute the value of goods lost if there are incomplete records

August 5th, 2011 Comments off
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When goods have been lost in a fire or by a theft the value of such loss must be calculated for:

(a)    The loss to be reflected in the trading account at the year end as a reduction of the cost of sales

(b)   A claim for compensation to be prepared for insurance compensation

(c)    Tax purposes.

If detailed stock records have not been kept or destroyed , the value of stock lost must be calculated using the incomplete records technique of finding a missing closing stock in a trading account. Any difference between the quantity of stock so calculated and actual stock remaining after the incident is the value of stock lost.

Go to the article for additional information on how to compute for Stock Loss Claim

 

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Financial Accounting

 
 

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