Question

State whether the following statement is True or False with reasons.

Goods lost by theft is debited to goods A/c.

Options

• True

• False

Answer 1

This statement is false.

Explanation:
As per the Real Account rule, "debit what comes in and credit what goes out." When goods are lost by theft, they are considered to have gone out, but they are recorded as a loss. Therefore, the correct entry would debit the "Loss by Theft" account and credit the Goods A/c.