alleryA loss due to fire (not insured) is treated as:
ATrading Account debit
BProfit & Loss debit
CCapital reserve item
DGoodwill on books
Answer & Solution
Correct answer: B. Profit & Loss debit
1. Fire loss is an abnormal loss outside trading.
2. It is debited to P&L to reduce net profit.
3. If insured, the recoverable amount is shown as receivable.
_Source: ICAI BoS Foundation Paper 1, Ch 7 U1 "Final Accounts", §1.2 exception_
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