Accounting MascotAccounting Q&A

What is a decrease to net worth caused by day-to-day activities called?
submitted by Arshdeep

J.Ribbles

That's called life, my friend.

Mr Toad

That's called a loss, or sometimes just a drop in net worth. It happens when the company spends more than it earns on normal activities.

Yuletide

You could call it a reduction in retained earnings. When you have expenses or losses from normal business operations that lower the owner's equity, that's what you get.

Rohnson

There are probably a few ways to refer to that. When a business's net worth goes down because of everyday stuff like paying bills or buying supplies, it's losing value, which you could call a dip in net worth or a cash drain.

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