Do you know non-profit organizations don't need to maintain a large set of books of accounts? However, they need to prepare financial statements at the end of every financial year. So, for this purpose, they prepare receipt and payment accounts and income and expenditure accounts and a Balance Sheet. While receipt and payment account is a simple summary of cash and bank transactions. On the other hand, the income and expenditure account reflects the income and expenditure of the current year … [Read more...]

The provision refers to a liability whose amount and timing of occurrence are not definite. We create provisions as a charge against profit so as to meet the loss or decrease in the asset's value. It is a liability that one can measure with a substantial degree of estimation. But contingent liability, is not a real liability. This is because it is not predictable that there will be a need for an outflow of financial resources to settle obligations. Hence, the confirmation of the existence of … [Read more...]

Intraday Trading is one in which the purchasing and selling of stocks take place within the same day before the market closes. As against, Delivery Trading is the type of trading in which the investor buys shares one day and sells the same on a later date after holding them for some days. This means that the investor purchases shares and then holds them for a certain period. Thereafter, on the delivery of the stocks, it appears in his/her Demat Account. Investors can sell the stocks whenever … [Read more...]

About 10 years ago, only full-service brokers were ranked at the top positions on the stock brokers list. But now, if you see the charts, most of the top brokers are discount brokers covering more than 50% of the active investors. Isn't it a big change? In fact, the total number of active investors is doubled all this time. While Discount Brokers provide trading platforms and free trading software to the investors. It is just like a self-service facility for investors. Full-Service Brokers … [Read more...]

A company is an artificial person whose management is done as per its constitution which we know as Memorandum of Association (MoA). So, the company's MoA defines everything including the maximum amount that the company can raise from the general public by the issuance of shares. That upper limit stated with regard to the share capital is called Authorized capital. Authorized Capital refers to the share capital with which a joint-stock company is registered On the other hand, the issued … [Read more...]

Revenue deficit indicates indebtedness in the present budget owing to total revenue receipts and expenses proposed in the budget. It is a situation when the revenue expenditure is in excess of the revenue receipt. All such transactions having an influence over the current income and expenditure of the government are covered here. Conversely, Fiscal deficit is a measure that shows the degree of dependence of the government on borrowings. Fiscal Deficit reflects estimated borrowings by the … [Read more...]

Accounting is meant to keep a complete record of the business transactions in a sequential manner, which forms a base for the preparation of the financial statements of the company. It aims at providing information to the interested parties to make sound financial decisions. Accounting is a business language in which the economic activities of the enterprise are recorded and presented. On the contrary, the profession opted by accountants is termed accountancy. Who is an Accountant? An … [Read more...]

Mutual Funds involve the pooling of money of lakhs of investors and making an investment in financial instruments of multiple companies and sectors. On the other hand, a Systematic Investment Plan or SIP is a technique for making investments in mutual funds. It is a method that allows an investor to invest in small but regular amounts, in a mutual fund so as to accumulate wealth over time. Nowadays, with the introduction of various apps, and new investment avenues, investing in the stock … [Read more...]

Basically, there are two types of circular flow of income - Real Flow and Money Flow. The biggest difference between real flow and money flow is that in case of real flow, exchange of goods and services takes place among various sectors of the economy, but when we talk about money flow, the monetary exchange between the two sectors exists. A two-sector economy is one where only two sectors exist, i.e. the household sector, which represents the consumer group and producer sector which … [Read more...]

The concept of stock and flow is mainly used while computing the national income of a country. There are a number of terms related to national income which are classified into stock and flow. For Example: While savings is stock, investment is a flow, the distance between two places is a stock, but the speed of the vehicle is a flow. Similarly, income is a flow, whereas wealth is a stock. So, what we have understood with the given examples is that stock implies the reserve of inventory or … [Read more...]