Disringus between loss and expense
Answers
Answer:
Explanation:
Loss – is the excess of expenditure incurred over revenue earned by a business for a given accounting period. It reduces the total capital invested in the business.
Loss = Expenses - Revenues
Such monetary damage may arise due to;
Business operations – Relating to business activities.
Non-recurring events – Relating to unforeseen events e.g. fire, theft, loss on sale of fixed assets, etc.
Accounting loss – Relating to accounting policy or accounting standard changes, etc.
Expense – Money spent by a firm for generating revenue is termed as expenditure or expenses. The cost incurred as expense usually expires during the same accounting period, i.e. it is not carried forward to a future period.
Expenses may occur in the following forms;
Cash payment of currency, for e.g. paying bills such as rent, salaries, etc.
A decline in the value of assets (e.g revaluation loss or investment loss), etc.
Accepting a liability, example – accrual of rent, etc.
The total cost of goods sold.
Depreciation & Amortization.
Bad debts, etc.