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Workmen Compensation Reserve is ₹52000 and claim is ₹65000. What is the extra loss?

Answer and explanation

Correct answer: ₹13000

The correct answer is A: ₹13,000. First compare the claim with the reserve: ₹65,000 − ₹52,000 = ₹13,000. The reserve can cover only ₹52,000, so the remaining ₹13,000 is the extra loss. Option A is correct. Option B is only the amount of the reserve, not the uncovered amount. Option C is the full claim, but most of it is already covered by the reserve. Option D is wrong because the claim is greater than the reserve, so some loss remains. This extra loss is debited to the old partners in their old ratio. Exam cue: whenever claim exceeds reserve, subtract reserve from claim.

Related tags

Workmen Compensation ReserveExcess ClaimLoss

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