Key Differences

In Horizontal Financial Analysis, the comparison is made between an item of financial statement, with that of the base year's corresponding item. On the other hand, in vertical financial analysis, an item of the financial statement is compared with the common item of the same accounting period. Financial Statement implies the formal and final summary of the financial affairs of the concern, indicating the performance, profitability, position, etc. The process of thoroughly analysing the … [Read more...]

Turnover is a broad term which is used in different contexts in different disciplines. In general, it implies the business or trading done by a company, in terms of money, in a given period. On the other hand, the word revenue is specific in nature, which refers to the proceeds received by the company in a particular period. It is not the profit of the company, rather it is the receipts of the company. Whenever we talk about how big a company is? or how successful it is? Or how much it has … [Read more...]

Secondary market refers to a market wherein already issued securities and financial instruments are traded. It includes both exchanges and OTC market. Exchange refers to the formally established stock exchange wherein securities are traded and they have a defined set of rules for the participants. When the trading is performed through the exchange, it is under the supervision of the exchange and so it ensures that all the rules and regulations are duly complied with. Conversely, Over the … [Read more...]

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...]