Income Statement reflects the net profit or loss from the business activities for a particular accounting period. On the other hand, cash flow statement keeps a record of overall changes in the cash and cash equivalents of the business organization during a particular financial year. Financial Statement refers to the official record of the financial activities and the overall position of the business entity. It is the final destination of the whole process of accounting, which comprises of … [Read more...]
Difference Between Retained Earnings and Reserves
Retained Earnings implies a portion of companies net earnings that is set aside and not paid as a dividend, for the purpose of investing the amount in primary activities of the business or pay the debt. On the other hand, reserves can be understood as the part of profit earmarked to provide for business needs in future or to fulfill future contingencies and unexpected liability. Risk and uncertainties are inherent in business and so they set up a mechanism to protect the business, on the … [Read more...]
Difference Between Debit and Credit in Accounting
"Luca Pacioli" is the father of accounting, who discovered the concept of double entry system of book-keeping. As per this system, each and every business trasaction affects two sides of an account, i.e. debit, and credit. While debit indicates the destination, credit implies the source of monetary benefit. In an accounting entry, the source account of a transaction is credited, whereas the destination account is debited. Debit represents the left hand side of the account, whereas credit … [Read more...]
Difference Between Cash and Fund
Cash can be defined as the money readily available with the enterprise, in the form of currency notes and coins. On the other hand, funds refer to each and every financial resource of a firm like cash, bank balance, accounts receivable and so on. It is something, which kept aside by the organization for a distinct objective. No matter what the size or nature of the organization is, money is the basic requirement of every enterprise, as it helps the business to survive and grow. The … [Read more...]
Difference Between Cost Center and Profit Center
An activity center or responsibility center is the unit of business organization which is accounted for a specific task or activity. Cost Center and Profit Center are the two major types of the activity centers. A center for which cost is ascertained and used for the purpose of cost control is known as Cost Center, whereas a center whose performance measurement can be done only through its income earning capacity is known as Profit Center. The ascertainment of the cost center is helpful in … [Read more...]
Difference Between Accounting and Finance
Accounting is an art of systematically keeping the record of business events and transactions, so as to ascertain the financial position and profitability of the company at the end of financial year. It is not exactly same as finance. Technically, finance is a part of economics which is concerned with resource allocation and management. While accounting aims at providing financial information of the company to the users for the purpose of rational decision making, finance focuses on matters … [Read more...]
Difference Between Voucher and Invoice
To keep a complete record of business transactions, vouchers and invoices are maintained by the company in support of the financial statements. Voucher refers to a printed document, that is used as a witness for a transaction, like the purchase of product or asset, payment of the liability. It keeps a record of the ledger account, in which the transaction is recorded. As against this, the invoice is a non-negotiable instrument prepared by the seller and sent to the customer, containing the … [Read more...]
Difference Between Financial Accounting and Management Accounting
Accounting, refers to the process of recording, classifying and summarizing in monetary terms, the business transactions and events and interpreting the results. It is used by entities to keep a track of their financial transactions. Financial Accounting and Management accounting are the two branches of accounting. Financial accounting stresses on giving true and a fair view of the financial position of the company to various parties. On the contrary, management accounting aims at providing … [Read more...]
Difference Between Cash Flow and Fund Flow Statement
Cash Flow statement shows the changes in the cash position (Inflows and outflows) of a firm. It is an analytical reconciliation statement which explains the reasons for the differences between the opening and closing cash balances over a period. On the other hand, 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. The financial position of any company can be better … [Read more...]
Difference Between Insolvency and Bankruptcy
Insolvency can be defined as a financial condition, where an individual or entity is unable to meet the financial obligations as they are due for payment. It is often confused with the term bankruptcy, but they are different. Bankruptcy is a situation when the court of law has declared the insolvency of a person or entity and passed orders for its resolution, i.e. the property of the bankrupt is disposed off, so as to pay creditors. In other words, the fundamental difference between … [Read more...]
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