Why is inventory loss a non operating expense rather than an administrative expense?

Because of the strong cash in hand and inventory liquidity, if the cause of the inventory loss cannot be ascertained, the loss will be directly expensed, which is included in the cost of normal operation; However, the inventory loss of fixed assets is often not caused by operation, and is not included in the period expenses, but directly included in the non-operating expenses, so that it will not have an impact on the operating profit, but only affect the total profit.

Thinking about this question in the context of the income statement is a little easier to understand.

The normal wear and tear of the old account and the inaccurate measurement caused the inventory loss, the management expenses and abnormal losses are debited after approval, and the non-operating expenses are debited after approval, and the responsible person debits other receivables after approval.

At present, the new accounting accounts and main accounting treatments, the inventory losses are normal losses and inventory losses caused by inaccurate measurement, and abnormal losses are all debited and debited non-operating expenses, and are not recorded in management expenses. It belongs to the responsible person to debit other receivables.

Deposit inventory loss entries.

Borrowing "to be disposed of property loss and excess storage loss.

"Inventory of goods x commodities or related raw materials, packaging, etc.

Post-approval entries.

"Non-operating expenses inventory loss very loss.

Deposit and loan losses are normal losses.

Credit" to be disposed of property loss and excess deposit loss.

The entry is approved by the responsible person.

"Borrowing its receivables from other persons xx persons.

Credit" to be disposed of property loss and excess deposit loss.

Non-operating expenses.

1. This account accounts for various non-operating expenses incurred by the enterprise, including losses on disposal of non-current assets, losses on the exchange of non-monetary assets, losses on debt restructuring, expenses for public welfare donations, extraordinary losses, inventory losses, etc.

Is that okay?

Gains, losses or damages to inventory should be accounted for as gains or losses on property to be disposed of. After being approved according to the management authority, it will be dealt with separately according to the reasons for profit and loss.

Profit: 1. Before approval.

Borrow: raw materials and other accounts.

Credit: Pending property loss and overflow.

2. After approval.

Borrow: Loss or overflow of property to be disposed of.

Credit: Administrative expenses.

Inventory loss: 1. Before approval.

Borrow: Loss or overflow of property to be disposed of.

Credit: raw materials.

Tax Payable – VAT payable (input tax transferred out).

2. After approval.

It is a normal loss, a general loss caused by mismanagement, and a net loss after deducting other accounts.

Borrow: Administrative expenses.

Credit: Pending Property Gains and Losses.

The part that is indemnified by the responsible person and the insurance company.

Debit: Other receivables.

Credit: Pending Property Gains and Losses.

It is an extraordinary loss caused by natural disasters and force majeure factors.

Borrow: Non-operating expenses — extraordinary losses.

Credit: Pending property loss and overflow.

There is a situation where the residual material is put into storage.

Borrow: raw materials.

Credit: Pending property loss and overflow.

1.Inventory losses for which the cause cannot be ascertained, including administrative expenses or non-operating expenses, and 2) inventory losses.

For the inventory loss, the enterprise prepares accounting entries according to the "inventory inventory report" as follows:

Borrow: Loss and Excess of Property to be Handled Loss and Excess of Current Assets to be Treated.

Credit: raw materials.

Turnover materials. Inventory items, etc.

For the inventory loss, the transfer should be made according to the reason for the loss.

It belongs to the loss within the quota and the error in the measurement of the daily receipt and dispatch of inventory, that is, the normal loss, which is transferred to the management expense after approval.

Borrow: Administrative expenses.

Credit: Loss and Excess of Property to be Handled Loss and Excess of Current Assets to be Treated.

For losses that should be compensated by the person at fault, the following entries should be made:

Debit: Other receivables.

Credit: Loss and Excess of Property to be Handled Loss and Excess of Current Assets to be Treated.

For inventory losses due to irresistible reasons such as natural disasters, that is, abnormal losses, the following entries should be made:

Borrow: Non-operating expenses — extraordinary losses.

Credit: Loss and Excess of Property to be Handled Loss and Excess of Current Assets to be Treated.

Other losses that cannot be recovered are credited to the "Administrative Expenses" account upon approval.

Borrow: Administrative expenses.

Credit: Loss and Excess of Property to be Handled Loss and Excess of Current Assets to be Treated.

If the damage is caused by mismanagement or other reasons, the corresponding input tax should be transferred out.

2.Travel expenses are generally included in administrative expenses. Usually, you can register in detail and include management expenses when making accounts.

3.Is it that all the expenses incurred in the production workshop of the enterprise are included in the manufacturing costs? No, the enterprise workshop can also be subdivided.

4.Why can't the cash profit be offset against the management expenses, and all the reasons for which cannot be ascertained are included in the non-operating income? The surplus cash shall be debited to the "cash in hand" and credited to the account of "property loss and excess to be disposed of", and if it is paid to the relevant personnel or units after the approval of processing, it shall be included in the "other accounts payable" account; If the reason cannot be ascertained, it shall be included in the "non-operating income" account.

There are regulations as to why the cash profit cannot be offset against the management expenses.

1. Poor management, in the case of compensation, it needs to be included in other receivables.

Debit: Other receivables - ** responsible person.

Credit: Pending Property Gains and Losses.

2. If no one compensates, it will be directly included in the management expenses.

Credit: Pending Property Gains and Losses.

The inventory loss or damage shall be accounted for as the loss or excess of the property to be disposed of. After reporting for approval according to the management authority, according to the reasons for the loss or damage of the inventory, the following situations shall be dealt with: if the inventory shortage is caused by the error in measurement and receipt and mismanagement, the value of the residual material, the recoverable insurance compensation and the compensation of the negligent person shall be deducted first, and the net loss shall be included in the management expenses; If the inventory is damaged due to extraordinary reasons such as natural disasters, the disposal income (such as the value of the residual materials), recoverable insurance compensation and compensation for the negligent party shall be deducted first, and the net loss shall be counted as non-operating expenses.

Because of the strong cash in hand and inventory liquidity, if the cause of the inventory loss cannot be ascertained, the loss will be directly expensed, which is included in the cost of normal operation; However, the inventory loss of fixed assets is often not caused by operation, and is not included in the period expenses, but directly included in the non-operating expenses, so that it will not have an impact on the operating profit, but only affect the total profit.

Thinking about this question in the context of the income statement is a little easier to understand.

If it is included in administrative expenses, it will affect operating profit; The accounting standards clearly state that the inventory loss of fixed assets must be included in the non-operating expenses (and must be handled after approval according to the management authority), and the inventory loss of fixed assets has no direct relationship with production and business activities, nor does it conform to the principle of proportionality, so it cannot be included in the cost and expense accounts.

It is stipulated that the cash inventory loss indicates that there is a problem with the management work, and it is reasonable to say that it should be credited to the management expenses!

If it is included in administrative expenses, it will affect operating profit; The accounting standards clearly state that the inventory loss of fixed assets must be included in the non-operating expenses (and must be handled after approval according to the management authority), and the inventory loss of fixed assets has no direct relationship with production and business activities, nor does it conform to the principle of proportionality, so it cannot be included in the cost and expense accounts.

Because of the strong cash in hand and inventory liquidity, if the cause of the inventory loss cannot be ascertained, the loss will be directly expensed, which is included in the cost of normal operation; However, the inventory loss of fixed assets is often not caused by operation, and is not included in the period expenses, but directly included in the non-operating expenses, so that it will not have an impact on the operating profit, but only affect the total profit.

Thinking about this question in the context of the income statement is a little easier to understand.