Question

Distinguish, with the help of example between Capital Losses and Revenue Losses.

Distinguish Between Capital Losses and Revenue Losses.

Answer 1

Basis of Distinction	Capital Loss	Revenue loss
Meaning	Capital loss occurs when fixed assets, shares, or debentures are sold for less than their book or face value.	Revenue loss occurs when a company's operations generate less than projected owing to both internal and external reasons.
Causes	Capital loss can result from the sale of assets or shares. Debentures are sold at a price lower than their face or book value.	Revenue loss is caused by high operating expenses and poor sales.
Nature	Capital loss is not expected during typical corporate operations.	Revenue loss is a regular part of corporate operations.
Indication	Capital loss does not necessarily reflect inefficiency in the firm.	Revenue loss demonstrates inefficiency in the firm.
Treatment	Capital loss is shown on the asset side of the balance sheet.	Revenue loss is recorded as accumulated loss on the negative side of trading and profit and loss accounts, as well as on the asset side of the balance sheet.