Loss Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Loss, written in plain English, along with examples of how it is used.
What is Loss?
(n) Loss is the reduction in value of a business, article, property etc happened as an effect of the occurrence or non-occurrence of an event or action. Eg. Loss on sale of a property
History and Meaning of Loss
The term "loss" refers to the reduction in value of a business, property, or item, caused by an event or action that has occurred or not occurred. This reduction often happens suddenly or unexpectedly and can have serious financial consequences. Losses can arise from various situations, including damage, theft, accidents, or natural disasters.
In the context of accounting and finance, loss is a term used to describe a negative balance in financial accounts. It indicates that the expenses have exceeded the revenues or that the value of an asset has decreased. A loss is an indicator that the business is underperforming and is not generating enough revenue to sustain itself.
Examples of Loss
John bought a car for $20,000 but sold it for $15,000 after a year. He incurred a loss of $5,000.
A fire broke out in a factory, causing damage worth $100,000. The company suffered a loss because of the reduced value of the damaged property.
A stock trader bought shares in a company at a price of $30 per share. The value of the shares decreased to $20 per share, resulting in a loss of $10 for each share.
Legal Terms Similar to Loss
Damages: A sum of money awarded in compensation for a loss or injury.
Liability: Legal responsibility for one's actions or omissions that result in losses or damage.
Casualty: A person or thing that is injured, killed, or destroyed in an accident or other event.