Month End Glossary

Net Loss

Net Loss is the financial result of an entity when its expenses exceed its revenues within a specified period of time.

Net Loss is calculated as the difference between the total revenues and total expenses of an entity during a specified period, where the total expenses exceed the total revenues. A Net Loss indicates that the entity has spent more than it has earned in revenue for that period, resulting in a negative financial outcome. For example, if a business has revenue of $100,000 and expenses of $120,000 in one month, it has incurred a Net Loss of $20,000. Understanding Net Loss is important for assessing the financial health of a business and determining areas for cost control or revenue improvement. Net Loss is typically found on the income statement prepared during the accounting close process.

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