Capital and Revenue Losses

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on April 29, 2023

The losses that a business may experience are divided into two types:

  • Capital losses
  • Revenue losses

Capital Losses

Capital losses are losses made on the sale of a fixed asset or resulting from raising money for the business.


An example of a capital loss is when an investment listed in the books at $48,000 is sold for $45,000; this leads to a capital loss of $3,000.

Also, a discount on the issuance of shares or debentures is a capital loss. Capital losses appear as assets in the balance sheet.

Revenue Losses

Revenue losses are losses incurred in trading operations, such as losses on the sale of merchandise.


As a case in point, merchandise costing $6,000 is sold for $4,000. In this situation, the loss of $2,000 is a revenue loss.

Revenue losses appear in the income statement of the year in which they occur.

Capital and Revenue Losses FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.