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Simple English definitions for legal terms
business loss
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A quick definition of business loss:
A business loss is when a company loses money or value unexpectedly. This can happen when something goes wrong, like a natural disaster or damage to property. The amount of the loss is usually calculated by subtracting the selling price from the original cost. Sometimes, insurance can help cover the cost of the loss. If a company sells something for less than it cost to buy, that's also considered a loss. A loss can affect a company's finances and may require them to make changes to recover.
A more thorough explanation:
Business loss refers to the decrease in value or financial detriment caused by an unexpected or unpredictable event. It can result from various factors such as the failure to maintain possession of a thing, casualty, or disaster.
- When a company's property is damaged due to a fire, the financial loss incurred by the company is considered a business loss.
- If a business invests in a stock that later decreases in value, the difference between the original cost and the selling price is considered a capital loss.
- When a business is unable to maintain possession of its assets due to theft, the financial loss incurred is considered a business loss.
These examples illustrate how unexpected events can cause a decrease in value or financial detriment to a business, resulting in a business loss.