Accounting is the art of keeping the record of business events and transactions in a systematic manner. It helps in determining the financial position and profitability of the company at the end of the financial year. It is not exactly the same as finance. Technically, finance is a part of economics that is concerned with resource allocation and management of funds. While accounting is a sub-domain of finance. The two differ in the sense that accounting is all about recording the flow of … [Read more...]
Difference Between Voucher and Invoice
In business, the recording of transactions takes place only when there is some documentary evidence present. They confirm the transaction. These can be in the form of receipt, counterfoil, cash memo, pay-in-slips, and invoice. These evidences are nothing but a source document. These documents act as a base to prepare vouchers. Based on these vouchers, the accountant passes entries in the books of accounts. Coming to invoice, whenever any credit sale transaction takes place, the firm prepares … [Read more...]
Difference Between Financial Accounting and Management Accounting
Financial Accounting is the original form of accounting that deals with recording business transactions and summarizing the data into reports, which are presented to the users so that financial decisions can be made rationally. On the other hand, management accounting is a new field of accounting that studies managerial aspects. It deals with the provision of financial data to the company's management so that they can make rational economic decisions. Financial accounting emphasizes on giving … [Read more...]
Difference Between Cash Flow Statement and Fund Flow Statement
The Cash Flow Statement shows the changes in the cash position (Inflows and outflows) of a firm. It is an analytical reconciliation statement that explains the reasons for the differences between the opening and closing cash balances over a period. On the other hand, the Fund Flow Statement is a statement that shows the ups and downs of the financial position or the changes in working capital of the entity between the two financial years. While a cash flow statement is concerned with the flow … [Read more...]
Difference Between Insolvency and Bankruptcy
In finance, the term 'insolvency' can be used in the context of both individuals and organizations. Insolvency represents that particular 'state' in which the individual or organization is not able to settle debts on time when they fall due for payment because of lack of funds or bank balance. On the other hand, Bankruptcy can be defined as a formal and legal declaration of an individual's inability to settle debts. What is Liquidation? Liquidation implies the closure or winding up of the … [Read more...]
Difference Between Private Limited and Public Limited Company
A private limited company is a closely held one and requires at least two or more persons, for its formation. On the other hand, a public limited company is owned and traded publicly. It requires seven persons for its setup. What is a Company? The company refers to that voluntary association of persons which is established with an aim of achieving common objectives. It is a separate legal entity, i.e. one should not confuse between the company and its members as both are different … [Read more...]
Difference Between Assets and Liabilities
Assets refer to the economic resources of the business which the firm acquires either out of its own funds or borrowed funds which are expressed in terms of money. These are meant for use in the business and will increase the firm's profit-earning capacity. On the other hand, Liability refers to the amount payable by the firm to external parties. It is the claim of external parties like creditors, banks, debenture holders, etc. on the assets of the firm arising due to past transactions. In … [Read more...]
Difference Between Purchase Order and Sales Order
A Purchase Order is simply an order raised by the organization, which contains information related to the product or the number of products that the organization wants to purchase from a supplier. On the Contrary, a Sales Order implies an order generated by the firm and delivered to its customer that acts as a confirmation document regarding the supply of the specified quantity of the goods or services, at a specified time, and agreed upon terms and conditions. Basically, the purchase order … [Read more...]
Difference Between Trade Discount and Cash Discount
Discount is an allowance provided to the customers in specific circumstances. In business, there are two main types of discounts, i.e. trade discounts and cash discounts. While trade discount is the reduction in the list price of the product, whereas cash discount is offered by the firms to its customers to encourage early payments. The main difference between trade discount and cash discount is that a separate ledger account for discounts allowed is opened in the books of the seller and … [Read more...]
Difference Between MBA and PGDM
MBA and PGDM are the two courses that help an individual learn entrepreneurial and managerial skills. The main difference between MBA and PGDM is that while MBA is a regular degree course offered by colleges affiliated with recognized universities, PGDM is a diploma course, which is offered by autonomous colleges. Students who have completed their graduation or who are about to complete their graduation, and want to go for higher studies, may have a question in mind regarding which one is … [Read more...]
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