Loss is defined as.

Loss is defined as.

• A. Decrease in equity resulting from activity other than selling goods/services (Ex. selling a plant asset)
• B. Increase in equity from selling goods/services
• C. Decrease in liabilities
• D. Revenue from operations

Answer: (A)

Loss means a decrease in a company’s equity that comes from events not related to owners taking money out or putting money in—such as selling a plant asset for less than its book value or other non-operating events that reduce value. This definition fits because losses reduce what the owners have invested in the business, outside of normal selling of goods or services. Revenues from selling goods or services, or profits from operating activities, increase equity, so they are not losses. A decrease in liabilities would reduce obligations but doesn’t describe a loss to equity, and revenue from operations clearly increases equity as well.

Loss means a decrease in a company’s equity that comes from events not related to owners taking money out or putting money in—such as selling a plant asset for less than its book value or other non-operating events that reduce value. This definition fits because losses reduce what the owners have invested in the business, outside of normal selling of goods or services. Revenues from selling goods or services, or profits from operating activities, increase equity, so they are not losses. A decrease in liabilities would reduce obligations but doesn’t describe a loss to equity, and revenue from operations clearly increases equity as well.