Dissimilarities between Capital Loss and Revenue Loss
Capital loss is the losses which arise not from the normal course of business. Loss on sale of fixed asset is an example for capital loss. Revenue loss happens when a business makes less from procedures than predictable due to external and internal factors. Followings are the main differences between capital loss and revenue loss
Capital Loss
- Causes: Capital loss occurs due to the sale of assets, share and debentures at a price less than their face value or book value.
- Nature: Capital loss does not occur in the normal course of the business.
- Indication: Capital loss does not indicate the inefficiency of the business.
- Treatment: Capital loss is shown on the asset side of the balance sheet.
Revenue Loss
- Cause: Revenue loss occurs due to heavy amount of operating expenses and low turnover or sales.
- Nature: Revenue loss occurs in the normal course of the business.
- Indication: Revenue loss indicates the inefficiency of the business.
- Treatment: Revenue loss is shown on the debit side of the trading and profit and loss accounts and asset side of the balance sheet as accumulated loss.
