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Define Normal Loss and Abnormal Loss what is the effect in
books of accounts.
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Answer Posted / sameer kanade
Certain losses are inherent in the production process and
cannot b eliminated.
These losses occur under efficient operating conditions and
are referred to as Normal or uncontrollable losses.
In addition to losses which cannot be avoided, there are
some losses which are not expected to occur under efficient
operating conditions, for example the improper mixing of
ingredients, the use of inferior materials and the
incorrect cutting of cloths. These losses are not an
inherent part of the production process and are referred to
as abnormal or controllable losses.
Normal loss is the loss expected during a process. It is
not given a cost.
Abnormal losses is the extra loss resulting when actual
loss is greater than normal or expected loss ,and it is
given a costs.
Since an abnormal loss is not given a cost, the cost
producing these units is borne by the good units of output.
Abnormal loss and gain units are valued at the same rate
as “good” units. Abnormal events do not therefore affect
the cost of good production. Their costs are analyzed
separately in an abnormal loss or abnormal gain account
| Is This Answer Correct ? | 26 Yes | 12 No |
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