Found 597 Articles for Management

The major differences between preference shares and debenture are as follows −Preference sharesDebenturesCapital funds of the company.Represents capital of the company.Shareholders are owners.Paid out of profits earned.Indirectly dilute the control of existing shareholders.Dilution in profit sharing percentage.Not tax deductible expenses.No tax benefits on preference capital.Effect on authorised capital.Blockage of funds is required to increase authorised capital.Borrowed funds of the company.Represents debt of the company.Shareholders are creditors.Interest paid irrespective of profits.Doesn’t dilute the control of existing shareholders.No dilution of profit sharing percentage.Tax deductible expense.Have tax shield.No effect on authorised capital.No blockage of funds to increase authorised capital.Read More

The major differences between equity shares and preferred shares are as follows −Equity sharesPreferred sharesMain source for fund raising.Long term financing.No redeem ability till lifetime of company.They have ownership right.Received dividend at fluctuating rate.Paid at end, in case of insolvency.They have voting right.They can’t be converted.Risk is high.Dividend share is decided by company board.No option for redemption.Have right to participate in management.Have lower denominationMore borrowing capacity.High chances of over capitalization.Reduction of capital by reorganising.They are entitled to bonus issue.Shares have lender of capital.Short term financing.Can be redeemed after certain period of time.They don’t have owner right.Receive dividend at fixed rate ... Read More

The major differences between capital expenditure and revenue expenditure are as follows −Capital expenditureRevenue expenditureExpenditure incurred in enhancing the current one or buying the new one.It’s a long term expenditure.Lump sum amount is required.Amount is capitalized.Reflects in balance sheet.It’s a non- recurring in nature.Improves earning capacity.Expenditure is not matched with capital receipts.Benefit period is more than a year.Have physical presence except for intangibles.Expenditure incurred to run day to day operations.It’s a short term expenditure.Amount is small when compared to capital expenditure.Reflects in profit and loss account (income statement).It’s a recurring in nature.It will maintain the earning capacity.Expenditure is matched with ... Read More

The major differences between accounting and bookkeeping are as follows −AccountingBookkeepingIncludes summarising, analysing, interpreting and communicating.Language of business.Balance sheet, profit and loss account and cash flow statements.Financial accounting, cost accounting, management accounting, human resource accounting, social responsibility accounting.Helps in taking critical decisions based on information.Plays a part in preparing financial statements.Requires analysis to interpret and compile the data.Seen by certified public accountant (CPA).Management can help important decision based on data.Require special skills because of its complex nature.Includes identifying, measuring, recording and classifying.Basis of accounting.Journal, ledger and trial balanceMain objective is to record all financial transactions in systematically.Not a part of ... Read More

The major differences between accounting and financial management are as follows −AccountingFinancial managementIt is a process of identifying, recording, measuring, classifying, verifying, summarising, interpreting and communicating financial information.Primarily used by both internal and external users.It reports financial related information within specific rules and principles.Accrual basis of fund.Prepared quarterly, half-yearly and yearly.Mainly focus on past activities.Financial accounting and management accounting are types.Main objective is to report about financial wealth of a firm.Prepares financial statements.It is a general managerial application used in the area of finance for decision making.Primarily used by company management and shareholders.Informs about assets and resources of a company ... Read More

The major differences between cost accounting and financial accounting are as follows −Cost accountingRecords information related to production activities.Records both historical and forecasted costs.Main objective is fix selling price of the product by calculating per unit cost.Both monetary and non-monetary transactions are recorded.Prepared whenever is necessary.Not necessary to prepare any statements for public.No specific format.Forecasted using budgeting technique.Stock is valued at cost.Financial accountingRecords information which are financial in nature.Records only historical cost.Main objective is to assess the profitability and financial position.Only monetary transactions are recorded.Prepared at the end of accounting period.Public companies prepared as a part of financial accounting.Not possible ... Read More

The major differences between cash accounting and accrual accounting are as follows −Cash accountingRevenue and expenses are recognized when it’s made through cash only.Simple and intuitive.Not recognized by GAAP.No holistic approach.Tax are not paid for money yet to receive.Mostly used by small business or sole proprietors.Focus on liquidity.Not more accurate.Helps to estimate how much cash is generated.Accrual accountingAll expenses and revenue are recognized.It is complex and difficult to understand.Recognised by GAAP and companies act.Holistic approach.Tax paid on paid for money yet to receive.Mostly used by business having high revenues.Focus on revenue/expenses/profit/loss.More accurate.Helps to estimate how much loss or profit occurred ... Read More

The major differences between depreciation and amortization are as follows −DepreciationIt determines asset useful life.Charged on tangible assets.Annual depreciation = (cost of tangible asset – salvage value)/useful life.Have salvage value.International accounting standard (IAS-16)/accounting standard (AS-6).Residual value is considered.Straight line method, reducing balance method, units of production method.AmortisationDetermined on the basis of its legal or economic life.Charged on intangible assets.Annual amortisation = (cost of intangible asset)/useful life.Don’t have salvage value.International accounting standards (IAS-38)/accounting standard (AS-26).Doesn’t considered residual value.Straight line method.

The major differences between Net present value and internal rate of return are as follows −Net present valueInternal rate of returnExpressed in absolute terms.The surplus amount of project.Helps in decision making.No effect of Variation in cash outflow.If NPV is greater than 1 then the project is accepted.Helps to take constructive investment decisions.Consider market rate of interest.Expressed in percentage terms.Tell me about the breakeven point.Will not help in decision making.Variation in cash flow will have negative or multiple IRR.The concept of the sensitivity of cost of capital is used.Doesn’t consider market rate of interest.Cash inflows are reinvested at IRR (Assumption).It is ... Read More

The major differences between cash flow statement and fund flow statement are as follows −Cash flow statementInflows and outflows of cash and cash equivalents.Main purpose is to show the movement of cash.Cash basis of accounting.Short term analysis.Inflows and outflows of cash.Contains both opening and closing balances of cash and its equivalents.Part of financial statement.Calculates net cash position.Mandatory to report as per GAAP guidelines.External use.Cash flow from operating, financing and investing.Fund flow statementShows change in financial position of the entity.Main purpose is to show the reason in change in financial position between two accounting periods.Accrual basis of accounting.Long term analysis.Sources and ... Read More