Examples of Capital Loss and Revenue Loss (Explained)

A business is always trying to get good profits at the end of the year but it depends on many factors. So many times this will negatively affect the business and incurs losses for the business. So there are two types of losses broadly calculated, first is a capital loss and second is a revenue loss.

Following are the main differences between capital loss and revenue loss.

What are Capital Losses?

Capital losses are those losses that do not arise during the normal course of business. 

The Capital Loss Examples:

1. Accidental loss of fixed assets.
2. The issue of securities at discount.
3. Redemption of securities at the premium.
4. Embezzlement of the case by the unauthorized person.
5. Obsolescence losses. losses by flood and earthquake etc.

There are also major differences between capital profits and revenue profits.

What are Revenue Losses?

Revenue Losses Arise from the normal course of business by selling goods or by providing services less than their cost price on inventory value less than its cost.

The Revenue Loss Examples:

1. Embezzlement of cash by the cashier.
2. Embezzlement of goods by the storekeeper.
3. Bad debts.
4. A loss by fire of unsecured goods.
5. Depreciation loss on sale of a depreciable asset.
6. Provision for doubtful debts and loss of goods due to the carelessness of the employee.

But the capital receipt and revenue receipt are important parts of any business.

Thus, profits and losses are part of a business’s operations. So it’s very important to know how capital losses and revenue losses affect us.