The entities stores were flooded resulting in a loss of inventory (Value £30,500). The entity had not insured its inventory. How should this loss be accounted for?

Question

Quizplus · Accepted Answer

The correct accounting treatment for the loss of uninsured inventory due to flooding is to recognize the loss as an expense by debiting Cost of Goods Sold and crediting Inventory. This reflects the reduction in inventory and the corresponding expense incurred due to the loss.

The Entities Stores Were Flooded Resulting in a Loss of Inventory