The current ratio is the ratio used by corporate entities to test the ability of the company to discharge short-term liabilities, i.e. within one year. Conversely, quick ratio is a measure of a company's efficiency in meeting its current financial liabilities, with its quick assets, i.e. the assets which are easily convertible to cash in a short duration. The ratio refers to an arithmetical expression, representing the proportion of one thing with respect to another. A financial ratio shows … [Read more...]

Expenses refer to the cost incurred on something and when it comes to business, the incurrence of expenses is a daily affair. These expenses may be related to production or regular business operations. When the expenses are linked to the production of a product, it is considered as a direct expense. Direct expenses can be identified or associated with the specific cost object such as product or service. Here, the word cost object refers to any product, service, process, or job for which cost … [Read more...]

The error of omission refers to the error in which a transaction is not at all recorded in the books, either completely or partially. As against, the error of commission implies the error in which the transaction is incorrectly recorded in the books. While recording and posting the entries, the occurrence of errors is quite common. Errors are the mistakes committed by the accounts staff while recording and maintaining the books, which cannot be corrected by overwriting. Errors are divided … [Read more...]

We all encounter words like economics and the economy, in our day to day life. But there are only a few people who can actually define and differentiate these two. Basically, economics is the study of an economy, i.e. its structure, condition, working, performance, issues, remedies, etc. It includes the analysis of the different types of the economic system, economic decisions and its implementation by various economic units, such as individual, family, institutions, government, etc. On the … [Read more...]

Auditing is a great way of assessing the effectiveness of an organization's internal control system and compliance with statutory laws and rules applicable to the enterprise. Financial Audit is not a new term for business class and all the other people relating to it, as it is the legal requirement of the companies, government organizations and institutions. All the companies, whether profit-making or not, have to get their accounts audited every year by an auditor. Financial Audit is often … [Read more...]

Startup financing refers to the primary introduction of funds, through various sources of finance, to convert the idea into the product or service, by commencing the business. Angel Investor and Venture Capital are the two major alternatives to startup financing. Angel Investors are wealthy individuals who facilitate young entrepreneurs and startups with financial backing in the early stages. On the contrary, Venture capitalist is a firm, comprising of a team of financial experts or a … [Read more...]

An accountant needs to ascertain the cost of the cost object (i.e. product, service or activity) either by cost centre, cost unit or by both. Cost Center is nothing but just one portion of the entire organization, to which cost is charged. On the other hand, Cost unit refers to the unit in which cost is expressed. The choice of an appropriate cost centre or cost unit, for which cost is assessed is based on various factors like the organization of factory, size and structure of the concern, … [Read more...]

Cost refers to the actual or estimated amount of expenses incurred or to be incurred on a particular article, or activity. The concepts of costing and cost accounting are related to cost accountancy, which is commonly juxtaposed by the students. Costing is concerned with the method of assessing the cost of goods produced and services rendered, at different stages of the production process. On the contrary, cost accounting is associated with the recording of income and expenses, determination … [Read more...]

Tax refers to a mandatory contribution of a person towards the country's revenue, which is imposed by the government (central or state) on the income or wealth of the persons or included in the cost of goods, services or transactions. Every assessee wants the tax liability to be minimum and for this, he/she can take recourse to tax planning through which tax burden can be reduced to a minimum, by using legitimate ways and means. Tax planning is often misconstrued with tax management, which … [Read more...]

Fundamental Analysis studies all those factors which have an impact on the stock price of the company in future, such as financial statement, management process, industry, etc. It analyzes the intrinsic value of the firm to identify whether the stock is under-priced or over-priced. On the other hand, technical analysis uses past charts, patterns and trends to forecast the price movements of the entity in the coming time. Stock prices change every minute, and so every investor is keen to know … [Read more...]