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Why is normal loss added to the right side of the process account alongside output? Why is it not subtracted from output? It is a loss right?
Then why is it recorded at its scrap value? Isn’t scrap value a revenue which reduces costs?The loss is not subtracted from the output, it is subtracted from the input!
The output is the input less whatever is lost.
The scrap value does reduce the costs – it is subtracted from all the costs in the process.
(Appreciate that although you are expected to understand the t-account entries, you cannot be asked to actually produce a t-account in the exam.)
so since the left side has to balance the right side, i.e the input figure must balance the output figure, the normal loss and any other abnormal loss is put on the right side with the output, while the input is placed on the left side?
Yes.
Have you not watched my free lectures, because I explain all of this in the lectures?
The lectures are a complete free course and cover everything needed to be able to pass the exam well.
Can we call normal loss Account as scrap account
Like in t account of normal loss
Normal loss account with scrap value
Dr.Process account dollar 30.
Abnormal loss account dollar 30Cr bank dollar 30
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