What is a Loss?

In accounting, a loss is an unrecoverable and unanticipated decrease in a resource or asset outside of normal business operations.

Various businesses experience losses in different forms. They may be the result of a sale of an asset below its carrying amount, from a lawsuit, or a write-down of an asset.

Losses from the sale of an asset is reported as nonoperating items since the loss is not from the main business activity.

Losses from a lawsuit are generally recorded before the actual payment is made. This is because the loss from a lawsuit is normally recorded based on an estimate when the loss is considered probable to happen.