Which is NOT an acceptable method for settling stock-out-of-sight claims?

The method of settling with an advanced budget is not an acceptable method for settling stock-out-of-sight claims because it relies on projected future performance rather than actual inventory levels or sales history. Stock-out-of-sight claims generally pertain to losses that occur when no physical inventory can be counted, such as theft or mysterious disappearance. In these cases, accurate assessment relies on historical data, physical counts, or recognized estimation techniques that are grounded in past performance rather than future projections.

In contrast, using a physical inventory count allows for a verified assessment of remaining stock, which is essential for accurately determining losses. Calculating based on average annual sales provides a historical basis from which to derive estimates of what should have been on hand during the period of loss. Applying standard loss estimation techniques also utilizes established methods for evaluating losses in terms of risk and historical data, thereby ensuring that the settlement is rooted in objectively measurable factors. These methods provide a more reliable framework for settling claims effectively.