What is defined as an unwelcomed and unplanned reduction in value?

The term that best fits the description of an unwelcomed and unplanned reduction in value is "loss." In this context, a loss refers to a decrease in the value of an asset or the overall financial position of an individual or entity, often resulting from unexpected events such as market declines, theft, or damage. This definition encompasses the essence of loss as it implies not only a decrease in financial worth but also the unfavorable and unintended nature of that reduction.

In contrast, a decrease in income refers to a reduction in earnings but does not necessarily indicate a reduction in value, as it could be part of normal business fluctuations. Liability pertains to obligations or debts, which may represent an increase in financial responsibility rather than a decline in value. Expenditure involves the act of spending or outlaying resources, which again is not intrinsically related to a decline in value but rather an allocation of funds. Thus, the definition of loss aligns perfectly with the characteristics highlighted in the question.