What really to consider loss

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This discussion delves into the definition of business loss, questioning whether it solely refers to a reduction in existing assets or also encompasses potential gains that are given up when choosing one alternative over another. It highlights the concept of opportunity cost, such as choosing shares over a more profitable fixed deposit, and explores why these forgone gains are often not considered 'real' losses in accounting.

Derin Bulo

Derin Bulo (Querist)

10 November 2022 is loss the reduction in whatever we have or does it include the gains that we give up while choosing among different alternatives in business for eg investing in shares instead of investing in fd that could have earned more

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 November 2022 The loss is the reduction in whatever we have.

Investing in shares instead of investing in fd that could have earned more is only oportunity loss.

Derin Bulo

Derin Bulo (Querist)

10 November 2022 opportunity loss is also a loss then why such a loss is not considerd?

Derin Bulo

Derin Bulo (Querist)

10 November 2022 opportunity loss is also a loss then why such a loss is not considerd?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 November 2022 The value of a lost chance or a potential profit that was not realized because a course of action was taken that did not permit the investor to obtain that profit.
It's unrealised profit hence not accounted

Derin Bulo

Derin Bulo (Querist)

10 November 2022 sorry sir I didn't get what u said in the latest reply

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 November 2022 Opportunity gain/loss is not a real one hence not accounted.
It's hypothetical not real.

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