IFRS Vs GAAP is the most debatable topic in accounting where the former is defined as the financial reporting method having universal applicability while the latter are the set of guidelines made for financial accounting. Since past few years, IFRS has gained significant importance, due to which over hundred countries of the world have adopted IFRS as the standard for accounting. The issuing organizations of the two are continuously working on their convergence. IFRS or otherwise known as … [Read more...]

Out of different investment avenues, mutual funds are considered as the safest form of investment. In mutual funds, many individual investors with common financial goal pool their money, and the asset management company invest the total fund in securities, in the capital and money market. On the other hand, Exchange Traded Fund or ETF is similar like a mutual fund investment, but they are traded on the stock exchange. An exchange-traded fund is a hybrid investment vehicle which amalgamates … [Read more...]

Foreign Direct Investment (FDI) is defined as the type of investment into production or business in a country, by an enterprise based in another country. It is often contrasted with Foreign Institutional Investment (FII), which is an investment fund, based in the country, other than the country, in which investment is made. Both are the forms of investment made in a foreign country. FDI is made to acquire controlling ownership in an enterprise but FII tends to invest in the foreign financial … [Read more...]

The lease is an agreement between two parties in which one party allows the other party to use and control the asset for a defined period, without actually buying it. It is not exactly same as renting, but a form of it. Renting implies a short-term agreement between the tenant and landlord, whereby the tenant pays rent for the use of asset like land, building, car etc. owned by the landlord. While in a rent agreement, the landlord can alter the terms of the contract, in a lease agreement, the … [Read more...]

The identification, measurement, and allocation of costs can help to determine the actual profit of the organization. Based on the relationship or degree of traceability to products, the costs are classified into direct costs and indirect costs. The two cost differ in the sense that expenditure which can be identified and allocated to a particular cost object or cost center, i.e. traceable to a particular product in an economically feasible manner, it is termed as a direct cost. On the other … [Read more...]

Charge means the asset is given as security, against a debt. The value of the security offered as collateral is either equivalent to or greater than the loan amount. It can be in the form of a pledge, hypothecation, mortgage, lien and assignment. The charge is created on the asset based on of the nature of security. In this context, pledge and hypothecation are quite commonly juxtaposed as in both cases, movable goods are given as collateral. However, they are different in the sense that the … [Read more...]

Private Equity and Venture Capital are a type of financial assistance provided to the companies at various stages. Due to the similarity in their concept, they are taken as one and the same thing. However, there is a considerable overlap amidst the two terms which is not known to people. Private Equity involves larger investments in the matured companies. Unlike, Venture Capital in which relatively small sized investments is made, in the companies passing through initial stages of their … [Read more...]

NPV or otherwise known as Net Present Value method, reckons the present value of the flow of cash, of an investment project, that uses the cost of capital as a discounting rate. On the other hand, IRR, i.e. internal rate of return is a rate of interest which matches present value of future cash flows with the initial capital outflow. In the lifespan of every company, there comes a situation of a dilemma, where it has to make a choice between different projects. NPV and IRR are the two most … [Read more...]

Charge refers to the collateral, given for securing the debt, by way of mortgage on the company's assets. There are two kinds of charge, fixed charge, and floating charge. The former is a charge on the real asset of the company that is identifiable and ascertained when the charge is created. Conversely, the latter is slightly different, which is created over the the assets circulatory in nature, i.e. the charge is not attached to any definite property. Companies borrow funds from banks, … [Read more...]

"Capital Reserve" means the part of profit reserved by the company for a particular purpose such as to finance long-term projects or to write off capital expenses. If we reverse the words, then we get a new term "Reserve Capital". The two terms might seem alike to a layman, but these are not one and the same thing, as they carry different meanings. Reserve Capital shows the part of the authorized capital that has not yet called up by the company and is available for drawing, if … [Read more...]