The losses suffered by a business concern may be divided into two types:-
Capital losses means losses made on the sale of a fixed asset or a loss resulting from raising money for the business.
Investment stands in the books at $48,000, is sold for $45,000, the loss of $3,000 is a capital loss. Discount on issue of shares or debentures is a capital loss. Capital loss is shown as an asset in the Balance Sheet:
Revenue losses are the losses which are incurred in the trading operation, such as the loss on sale of merchandise.