The correct answer is: A. Profit and loss account
Material losses due to abnormal reasons should be transferred to the profit and loss account. This is because these losses are not part of the normal business activities of the company and should not be included in the costing profit and loss account.
The costing profit and loss account is used to calculate the cost of goods sold. It is a sub-account of the profit and loss account and is used to track the costs of production. The costs of production are then used to calculate the cost of goods sold, which is a key figure in the profit and loss account.
Material losses due to abnormal reasons are not part of the normal business activities of the company and should not be included in the costing profit and loss account. These losses should be transferred to the profit and loss account, which is a statement of the company’s financial performance for a period of time. The profit and loss account includes all of the company’s revenues and expenses, including material losses due to abnormal reasons.
The following are the options of the question and a brief explanation of each:
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A. Profit and loss account
The profit and loss account is a statement of the company’s financial performance for a period of time. It includes all of the company’s revenues and expenses, including material losses due to abnormal reasons. -
B. Costing Profit and Loss Account
The costing profit and loss account is used to calculate the cost of goods sold. It is a sub-account of the profit and loss account and is used to track the costs of production. The costs of production are then used to calculate the cost of goods sold, which is a key figure in the profit and loss account. -
C. Trading Account
The trading account is a statement of the company’s trading activities for a period of time. It includes the company’s revenues from sales and its expenses from cost of goods sold and operating expenses. -
D. None of these
The correct answer is: A. Profit and loss account