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 ... 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 ... 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 ... 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 ... 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 ... 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 ... Read More

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 ... 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 ... Read More

The major differences between the general ledger and sub-ledger are as follows −General ledgerMaster account in which accounting transactions are recorded.Account receivables account payable, cash management, bank management and fixed asset.Have different characteristics for different transactions.One ledger account.Data volume is limited.Have a chart of accounts.Controls sub-ledger.Trail balance prepared.Sub ledgerIntermediate set ... Read More

The major differences between general journal and general ledger are as follows −General journalAll financial transactions are recorded.Subsidiary book.The primary step to record before ledger.The process of recording transactions are called journalizing.Narration is compulsory.No need of balancing.It has simple format.Recorded as per transaction date.Debit and credit recorded in column-wise.Follow concept ... Read More