ACCOUNTING THEORY- COST, EXPENSES, AND LOSS

You requested to deliver your auditors report personally to the board of directors of Sebal Manufacturing Corporation and answer questions posed about the financial statements. While reading the statements, one director asks, what are the precise meaning of the terms cost, expenses, and loss? These terms sometimes seem to identify similar items and other times seem to identify dissimilar items.

Required

a. Explain the meaning of (1) COST, (2) EXPENSE, and (3) LOSS as used for financial reporting in conformity with generally accepted accounting principles. In you explanation discuss the distinguishing characteristics of the terms and their similarities and interrelationships.