On 28th March, 2019 stock worth Rs. 10,000 was lost by fire. The insurance company admitted full claim. On 31st March. 2019 while preparing Final Accounts, it will be shown

The correct answer is: C. Both in Trading and Profit and Loss Account

The loss of stock due to fire is an expense that should be deducted from the gross profit to arrive at the net profit. The insurance claim received should be credited to the profit and loss account as it reduces the net loss.

The loss of stock will also be shown in the trading account as a deduction from the cost of goods sold. This is because the stock that was lost is no longer available for sale.

The following is a detailed explanation of each option:

• Option A: Only in Trading Account

This option is incorrect because the loss of stock due to fire is also an expense that should be deducted from the gross profit to arrive at the net profit.

• Option B: Only in Profit and Loss Account

This option is incorrect because the loss of stock due to fire is also a deduction from the cost of goods sold in the trading account.

• Option C: Both in Trading and Profit and Loss Account

This option is correct because the loss of stock due to fire is both an expense that should be deducted from the gross profit to arrive at the net profit, and a deduction from the cost of goods sold in the trading account.

• Option D: Both in Trading Account and Balance Sheet

This option is incorrect because the loss of stock due to fire is not an asset that should be shown in the balance sheet.