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
- 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.
- 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.