Question

the balancing figure in memorandum trading account prepared by a trader who has lost goods in fire indicates​

Answer 1

Answer:

The balancing figure in memorandum trading account prepared by a trader who has lost goods in fire indicates gross profit till day of fire.

Answer 2

The balancing figure in Memorandum Trading Account prepared by a trader who has lost goods in fire indicates gross profit till the date of the fire.

• In situations where the regular Trading Account cannot be formed owing to certain uncommon or extraordinary conditions, the Memorandum Trading Account is a sort of account that is prepared.
• The loss of commodities due to fire in this case is such an exceptional situation. The cost of goods sold up to the date of the fire would be subtracted.
• The subtraction will be from the total cost of goods purchased up to that date to determine the balance in the Memorandum Trading Account. This would give an estimate of the cost of the things lost due to the fire.
• Thus, the estimated cost of the goods lost as a result of the fire would be represented by the balancing figure in a Memorandum Trading Account created by a trader who has lost goods in a fire.

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