Forums Accounting What is the difference between expense and loss?

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    kritinidhi
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    What is the difference between expense and loss?

    #16491

    kritinidhi
    Member

    In accounting, though all three words that is cost, expenses and losses represent outflow of funds from company to outsider. However, there is difference in the way the outflow of funds or cash happens.

    Difference between expenses and losses-

    An expense is a cost used up in earning revenues in a company’s main operations. Some of the examples of expenses include advertising expenses, commission expenses, rent expenses, cost f goods sold, salaries and so on. Expenses also include costs used up during the accounting period such as interest expense, insurance interest and depreciation interest. While, a loss is associated with a “peripheral” or “incidental” transactions. Examples of losses include the loss on the sale of an asset used in business, loss from fire and loss from retirement of bonds. Loss incurred on non- recurring cases. For example- you sold an asset at lower price then its written down value.

    Another difference is, an expense includes only expired cost which is used up in earning revenues in a company’s main operations. While loss is the outflow of cash which arises not due to business transactions but due to some other events.

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