In general, two types of receipts occur during the course of business. Capital Receipts are described as the money brought to the business from non-operating sources like proceeds from the sale of long-term assets, capital brought by the proprietor, sum received as a loan or from debenture holders etc. In contrast revenue receipts are the result of firm's routine activities during the financial year, which includes sales, commission, interest on investment. Capital receipts differ from … [Read more...]
Difference Between Capital Expenditure and Revenue Expenditure
The occurence of expenditure during the course of business is very natural. Generally, expenditure is incurred to increase the efficiency of business and further returns. These are braodly classified into two categories, i.e. capital expenditure and revenue expenditure. Capital Expenditure is an expense made to acquire an asset or improve the capacity of the asset. Conversely, revenue expenditure implies the routine expenditure, that is incurred in the day to day business activities. The most … [Read more...]
Difference Between Purchase Order and Invoice
Purchase order or PO is the first formal offer document created by the buyer and delivered to the seller, with an aim of making purchase. When the document is accepted by the seller, it becomes a legally binding contract between the two parties. It indicates the type, quality, quantity, rate of the goods desired by the buyer. Once, the goods are delivered invoice is issued to the buyer for payment. Invoice is a commercial document, which is used by the seller to notify the buyer that payment is … [Read more...]
Difference Between Invoice and Cash Memo
A business transaction is one that is capable of being measured in monetary terms and that affects the company's operations. There are hundreds of business transactions that takes place daily. To record these transactions, there are different kinds of commercial documents are used. One such document is an invoice, which may be understood as a legal and commercial instrument, made by the vendor and sent to the customer or client, to authorize the sale. It sets forth, all the goods sent or … [Read more...]
Difference Between Whole Life and Term Life Insurance
Life insurance refers to insurance, which covers the human life, i.e. in the event of death, a certain amount is paid to the nominee or beneficiary. There are various types of life insurance products offered by life insurance companies, of which the two important ones are whole life insurance and term life insurance. Whole life insurance is a type of protection plan, wherein insurance of life is for an unspecified period. On the other hand, term life insurance is a pure protection insurance, … [Read more...]
Difference Between Accounting, Economic and Normal Profit
In simple terms, profit can be understood as all the income that is received by an individual. It is the lifeline of the business, as, without profit, the survival is difficult, rather impossible. In accounting, profit means surplus, i.e. the excess of total revenue over the expenses. Such a profit is known as accounting profit. On the other hand, in economics, you might have heard the term economic profit, which is nothing but the amount left over after deducting all implicit and explicit … [Read more...]
Difference Between Gross, Operating and Net Profit
Business is carried out with an aim of earning profit. It works as an incentive to the entrepreneur, for the risk taken and resources spent, during the financial year. Profit can be broadly classified as gross profit, operating profit and net profit. Gross profit implies the amount left over from revenues after deducting the manufacturing cost. It shows the firm's efficiency in production and pricing. Conversely, operating profit alludes to the profit attained after deducing cost of … [Read more...]
Difference Between Statement of Affairs and Balance Sheet
Small traders and partnership firms, do not maintain their books of accounts as per double entry system. They used to keep a track of cash and credit transactions only. However, at the end of the financial year, these firms also want to know the position of business. For this purpose, statement of affairs is prepared at the beginning and at the ends of the period, so as to determine the overall change in the capital, during the financial year. Statement of affairs is often confused with … [Read more...]
Difference Between Net Sales and Net Income
The primary objective of every company is to create sales, as it is the primary source of earnings, i.e. income to the company. Therefore, the sales of the company are directly related to its income, i.e. the higher the sales, the higher is its income and vice versa. Here, we are talking about the net sales and net income. Net sales can be explained as the amount of sales arrived at, after subtracting returns, damaged or missing goods and discount allowed. Net income, on the other hand, is … [Read more...]
Difference Between Gross Profit Margin and Net Profit Margin
In business and financial context, margin is defined as the distinction between production or acquisition of the product to the seller and its selling price. Gross Profit Margin implies a financial tool, employed to identify the financial health of the business, by depiction the amount of money left after deducting cost of production from the sales. On the contrary, net profit margin, is a financial metric determining the company's profitability, by exhibiting the percentage of revenue left … [Read more...]
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