Loss

A loss occurs when the cost to run a business (expenses) are higher than than the amount of money the business makes (revenue).

Imagine you're playing a video game, and you start with a certain number of points (initial investment). As you play (run your business), you lose some points (expenses) and gain others (revenue). If you end up with fewer points than you started, that’s a loss, showing that the game didn't go as well as you hoped.

For example; if a business earns $100,000 in one year, and spends $110,000 to run the business, there’s a loss of $10,000.