Revaluation Account is prepared only when there is any change in the value of asset and liabilities of the partnership firm, at the time of admission, retirement, and death of a partner. On the other hand, Realisation Account is opened when the firm goes into liquidation, so as to close the books of accounts and also to compute the net effect (profit or loss) arising due to the realisation of assets and settlement of liabilities. Revaluation account and Realisation Account are two types of … [Read more...]

Options and warrants are two derivatives traded in the exchange that give an option to the investor to buy the stock at a predetermined price and date. The basic difference between options and warrants is that while options are contracts, but warrants are financial instruments. Derivative connotes a financial instrument with no independent value, in essence, the value is ascertained from the value of the underlying asset, such as commodities, currencies, livestock, securities, bullion, etc. … [Read more...]

Vehicles are the long-term asset of the entity which is used in performing day to day business activities. To make use of vehicles like car, vans or pickup truck, there are two options open to you. One to own the car by buying it or to use it, for specified period by leasing the vehicle. Buying is simply acquiring the car by paying the price, either in the lump sum or via instalments. On the other hand, leasing is a bit different which allows you to use the asset for a fixed term, by paying … [Read more...]

In general, many misconceive hypothecation for a mortgage, however, the difference between these two lies in the factor, on which they are created. A charge can be created on the movable property or immovable property, so when a movable property is under the charge, it is said to be hypothecated, whereas a charge created over an immovable property, it is known as a mortgage. The term 'charge' implies the creation of right by any person (borrower) including a separate legal entity over its … [Read more...]

'Stock', a term used to denote securities that carry ownership interest and reflect potential claim on the assets and income, earned by the corporation. It is classified into two broad categories, i.e. common stock and preferred stock. The former implies the ordinary stock issued by the companies, while the latter, are the ones that carry preferential rights regarding dividend payment and repayment of capital. Stock indicates, the net worth or shareholder's equity, of the firm, which can be … [Read more...]

An annuity is described as a stream of fixed cash flows, i.e. payments or receipts, that occurs periodically, over time. For example, payment of housing loan, life insurance premium, rent, etc. There can be two types of annuities, i.e. ordinary annuity and annuity due. Ordinary annuity means an annuity which is related to the period preceding its date, whereas annuity due is the annuity related to the period following its date. Most of the people use an annuity as a retirement tool (pension) … [Read more...]

Bulls thrust up their horns while attacking the opponent, in the same way, when the market rises belligerently, it is said to be a bulls market. On the other hand, bears swipes down, their paws for attacking the opponent, likewise, when the market falls, it is known as bears market. In the stock market, the terms bulls and bears are commonly encountered which indicates, how the stock market is doing, at a particular time. For the novice investors, these terms are a bit confusing, but one can … [Read more...]

Nowadays, end number of investment avenues are available before investors. New investors often suffer a dilemma, that whether they should invest in mutual funds or go for individual stocks. There is a big difference between these two investment vehicles as in mutual fund is a pooled investment scheme, professionally managed by a fund manager who invests the money collected from different investors and invests it into stocks, bonds and other short-term securities of different companies. On the … [Read more...]

Fixed exchange rate and flexible exchange rate are two exchange rate systems, differ in the sense that when the exchange rate of the country is attached to the another currency or gold prices, is called fixed exchange rate, whereas if it depends on the supply and demand of money in the market is called flexible exchange rate. The depreciation of Indian Rupee against US dollar is the common headline of almost all news dailies, since past few years. Not only India but the primary concern of the … [Read more...]

In financial jargon, the terms investment and speculation are overlapping and used synonymously. In investment, the time horizon is relatively longer, generally spanning at least one year while in speculation, the term may extend up to a half year only. As per Benjamin Graham, an American economist, and professional investor, investment is an activity, which upon complete analysis assures the safety of the amount invested and adequate return. Conversely, speculation is an activity which does … [Read more...]