Calculating Fire Insurance Claim: Adjustments and Claim Amount

The video tutorial explains the process of calculating a fire insurance claim for Shalini Readers. It covers the details of the fire incident, the policy value, and the salvage. The tutorial goes through the financial records, including the balance sheet and transactions, and explains necessary adjustments for consignment and other transactions. It demonstrates the preparation of a memorandum trading account, focusing on stock valuation and gross profit calculation. Finally, it concludes with the final calculations and the process of filing an insurance claim, emphasizing the importance of accurate stock valuation and understanding policy terms.

What was the salvage value of the goods saved from the fire?

• $4,000

• $2,000

• $6,000

• $8,000

What was the policy value for the fire insurance claim?

• $50,000

• $20,000

• $30,000

• $40,000

What was the value of stock on the balance sheet as of December 31, 2018?

• $56,000

• $66,000

• $76,000

• $86,000

Why is it important to adjust stock values to cost?

• To comply with tax regulations

• To ensure accurate financial reporting

• To increase the insurance claim

• To simplify accounting procedures

What is the gross profit margin applied to sales in this scenario?

• 20%

• 35%

• 25%

• 30%

How are goods sent on consignment treated in the trading account?

• Excluded from purchases

• Included in sales

• Added to closing stock

• Deducted from opening stock

What is the cost value of goods withdrawn for personal use if the sales value is $8,000?

• $5,600

• $7,000

• $6,400

• $6,000

What is the final stock value on the date of the fire?

• $24,900

• $22,900

• $20,900

• $26,900

What is the actual loss after deducting salvage from the stock on the date of the fire?

• $20,900

• $22,900

• $24,900

• $26,900

What happens when the policy value is greater than the stock value on the date of the fire?

• The claim is denied

• The claim is reduced

• The stock is underinsured

• The stock is fully insured