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Normal Loss is a loss which is incurred in the process of normal business operations. Normal loss occurs due to expenses which are incurred in recurring basis in the businss.
Abnoral loss is a loss which is not incurred in the process of normal business operations. Abnormal losses are not of a recurring nature. Like loss due to fire or theft in the warehouse is an abnormal loss. Abnormal losses are normally covered by insurance policies.
Good Day!!!
I dont know a single word about consignment accounting..... please bear if i am wrong, as i am giving you my general opinion:
Normal Loss: A loss that is expected everytime with any consignment e.g., leakage, breakage etc.
Abnormal Loss: A loss that is not expected with every consignment e.g., Theft, Stolen, damage due to accident etc.
Normal losers:
*- the loss resulting price movement
* - Natural damage of goods
* - Accidents
* - Damage as a result of transport
Normal loss is occured in definately in normal course of buisness process (Manufacturing as well as trading)
On the otherhand,Abnormal Loss is such a loss which occured due to negligence,Natural Clamity,Mishandleing or Carelessness etc.
for eg, a cargo truck is loaded with oil cans and it moves from destination A towards B
Now the normal loss allocated10 ltrs regarding very minor leakage that will definately occur.
Now if the loaders of the truck mishandes the cans by throwing roughly or cans drop down on the road while tarvelling due to the negligence of truck Staff that is called Abnormal loss.
