what do you call left over goods(foods) in accounting?

Question

when you are making a balance statement or a general ledger or journal in accouting, what do you call the foods which you were not able to sell that day and would probably be spoiled already the next day?do you include that in the ending inventory or not?can you call it a loss?or simply left over food?

Answer 1

I would call it an expense. By that I mean the materials you used that day to generate that day's sales. Anything left over is waste, just like you paid for your office paper, which you end up using and throwing away.

Answer 2

Shrinkage of any kind doesn't require a journal entry. Spoilage, shoplifting and other inventory shrinkage reduces the ending inventory so reduces the gross profit without an entry.
Many places that sell food donate the food that won't be usable to homeless shelters or soup kitchens. Day old bread for example is still good to eat but not for a high class restaurant to serve. Some foods can be used for other purposes like the day old bread can be made into croûtons or bread crumbs or bread pudding but most will be donated.

Answer 3

To recognize spoilage expenses (this has an impact on the reader's of the financial statements) apart from the regular expenses, you must set up an inventory of all food, spoiled or not.

Afterwards, you should prepare an entry pertaining to spoilage as follows,
Debit: Loss on Spoilage
Credit: Allowance for spoilage - contra inventory account

If you expect to sell the spoiled inventory at a lower cost, example, to a fertilizer manufacturer, you may set up a spoiled inventory account.
Debit: Spoiled Inventory at expected selling price
Debit: Loss (or credit gain if applicable)
Credit: Inventory