Key Differences

Accounting information is reported in the form of a financial statement. The financial statement is the final outcome of the accounting process and is prepared as per the basic accounting principles, concepts and assumptions. It helps to draw conclusions on the company's profitability, efficiency, performance, and position. These are furnished in such a way that the users of financial statement can understand them easily and take decisions. It includes profit& loss account, balance sheet, … [Read more...]

While in "Trial Balance", the use of the terms 'Debit' and 'Credit' is to represent the nature of accounts. In "Balance Sheet", use of the terms like Assets and Liabilities indicate what the business owns and what it owes, respectively. Trial Balance is a part of the accounting process, which is a summary of debit and credit balances taken from all the ledger accounts. Every transaction affects two sides, i.e. every debit has a corresponding credit and the reverse is also true. The total … [Read more...]

Profit making is the main motto of every company. It works as an incentive to the entrepreneur for the risk taken by him, for running a business. It is like the fuel, which helps the business to survive, grow and expand in the long run. In business parlance, Net operating profit after tax, i.e. NOPAT, is the actual after-tax operating profit of the company or in simple terms, it is the earning of the company after interest and tax. Net Income, on the other hand, refers to the actual profit … [Read more...]

Cash flow Statement is as important as the other two parts (Profit & Loss Account and Balance Sheet) of the accounting information furnished in the form of financial statements at the end of the financial year. It is the statement which describes the flow of cash and cash equivalents in and out the organization. The statement is helpful to the stakeholders or say interested parties, in learning about the sources and uses of the company's cash during a particular financial year, from … [Read more...]

A balance sheet, or otherwise known as a position statement. It is a statement which shows the financial position of the company on a specific date. It lists all the Ownership, i.e. assets and Owings, i.e. liabilities of the company. A profit and loss account, on the other hand, is an account that shows the revenue earned and expenses sustained by the company, during the course of business, in a financial year. These two along with the cash flow statement constitute the financial statement. … [Read more...]

Cost accounting is that branch of accounting which aims at generating information to control operations with a view to maximizing profits and efficiency of the company, that is why it is also termed control accounting. Conversely, management accounting is the type of accounting which assist management in planning and decision-making and thus known as decision accounting. The two accounting system plays a significant role, as the users are the internal management of the organization. While … [Read more...]

In business parlance, Gross Income refers to the income arising after deducting direct expenses from sales. Whereas, Net Income implies the income left over after subtracting all the indirect expenses. From the taxation point of view, Gross Income is the income earned from various sources by an individual or enterprise. Technically, it is the gross total income or GTI. On the other hand, Net Income is the total income after deducting all the allowable expenses and set off and carry forward of … [Read more...]