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Banking & Finance Articles
Page 94 of 102
Differentiate between revenue and turnover.
The major differences between revenue and turnover are as follows −RevenueIt is the total value of goods sold by a company.It is the money earned by selling goods/services.It effects the profitability of a company.It calculates the gross profit, net profit and operating profit.It determines growth of the company.The types of revenue are operating revenue and non-operating revenue.It is mandatory to report on income statement.TurnoverIt is an income generated by trading of goods/services.It is makes/burns of the asset by a company.It effects the efficiency of a company.It calculates inventory turnover ratio, asset turnover ratio, sale turnover ratio, accounts receivable and accounts ...
Read MoreCompare marginal tax rate and effective tax rate.
The major differences between marginal tax rate and effective tax rate are as follows −Marginal Tax RateIt is additional tax paid on additional dollar is earned.It’s a percentage of income paid on additional dollar earned.Different tax rates are applicable.Amount paid is higher (calculated amount).Higher income people/companies pays more taxes.Taxation goes down when income decreases.Not good for business expansion and is a complicated method.Effective Tax RateIt is tax paid on taxable income.Its percentage of income paid on taxes.Multiple tax rates are applicable.The tax amount is less (compared to marginal tax rate).It has diversified impact.It has minimal impact when income decreases.It promotes ...
Read MoreWhat are the differences between limited partner and general partner?
The major differences between limited partner and general partner are as follows −Limited partnerLiable to extend of investment made.Ownership is predefined in agreement.Minimal control partner.Profit/loss is shared according to investment proportion.It has complex structure.More paperwork is required.Less participation in day to day business activities.General PartnerIt has unlimited lability.It has equal ownership right.More control as compared to limited partner.Profit/loss shared equally or according to agreement.It has simple structure.Less paperwork is required.Major participation in day to day business activities.
Read MoreWrite the difference between calendar year and fiscal year.
The major differences between calendar year and fiscal year are as follows −Calendar yearIt has fixed time period.It is used in normal life undertaking.It includes 365 days (from January 1st to December 31st).Tax reporting is easy.MNC’s Financials is simple.Easy to compare financials of different companies.Fiscal yearBusiness can choose its starting date as per their requirement.It is used to prepare business accounting, financial reporting and tax reporting.12 months’ period is there in a fiscal year.Tax reporting is complicated as compared to calendar year.MNC’s financial is time taking.Comparison of financials of different companies is difficult.
Read MoreCompare limited liability companies and partnership.
The major differences between limited liability companies and partnership are as follows −Limited liability companiesPartnershipsOffers features of both partnership and a body corporate.It is governed by Limited Liability Partnership Act, 2008.Registration is mandatory with the ministry of corporate affairs.Charter document is LLP agreement.Liability is limited to capital contribution (except for fraud cases).Can be sued/sue in its nameThey have separate legal status.Name of the firm contains LLP in its suffix.No limit for maximum partnersThere is perpetual succession.Audit of account is mandatory, only if turnover is above 40 lakhs and capital is above 25 lakhs.LLP can’t be converted to partnership.Cost of formation ...
Read MoreDistinguish between stock option and Restricted share unit (RSU).
The major differences between stock option and Restricted share unit (RSU) are as follows −Stock OptionIt is right to employee to buy fixed share at a fixed price and time.The employees receive stock after vesting period.Stock is used as a mode of payment.Taxes on non- qualified stock and incentive stock.Market price (stock) is greater than grant price.The shareholders have full rights.There are voting rights and dividends.There is no exercise price.Restricted Share Unit (RSU)It is an assurance by a company to pay the amount of stock/cash after questing period is completed.The employees can get tax benefits after vesting period.The mode is ...
Read MoreWrite the difference between EBITDA and net income.
The major differences between EBITDA and net income are as follows −EBITAIt calculates profit making ability of a firm.The earning potential of a company can be calculated.EBITDA is defined as sum of EBIT, depreciation and amortisation (or) sum of net profit, taxes, interest, depreciation and amortisation.Tells about money income generated before expenses (taxes, interests, depreciation and amortisation).There is Overstates the cash flow.It is used by start-ups.Net incomeIt indicates total earnings of a company.It calculates earning per shares (EPS).Net income is defined as difference between revenue and cost of doing business.It tells about total earnings after reducing expenses (interest, tax, depreciation ...
Read MoreDifferentiate between EBIT AND EBITDA.
The major differences between EBIT and EBITDA are as follows −EBITEBIT refers to Earnings Before Interest and Tax.It measures company’s profit.Operation results are represented on accrual basis.EBIT is defined as difference between revenue and operating expenses.Depreciation/amortisation is taken into account.When capital intensive is less, financial markets gives priority to this ratio.EBITDAEBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation.It measures actual operating performance of a firm.Operation results are represented on cash flow basis.EBITDA is defined as difference between revenue and operating expenses.Depreciation/amortisation are not taken into account.When sectors are capital intensive, financial markets will emphasize this.
Read MoreCompare EBIT and operating income.
The major differences between EBIT and operating income are as follows −EBITIt calculates company’s profitability.It is used to understand the company’s profit making capacity.It is not recognised by GAAP.The adjustments are made.The non-operated expenses are also considered.It is not reported in financial statements.Operating incomeIt calculates profit gained through operations.It is used to know company’s capacity to convert their revenues into profit.It is recognised by GAAP.There is no need for adjustments.Only operating expenses are considered.It is reported in the financial statements.
Read MoreWrite the difference between cost accounting and management accounting.
The major differences between cost accounting and management accounting are as follows −Cost accountingManagement accountingIt helps in taking decisions in cost computation, cost control, cost reduction.Short term planning.It has a very narrow scopeIt measures quantitative.It is a sub set of management accounting.There is a specific procedure.Historic informed is the basic in decision making.Requires statutory audit.It does not depend on management accounting.It is used by management, shareholders and vendors.It helps in taking effective decisions in business.Short/long term planning.It has much broader scope.It measures both quantitative and qualitative.It itself is a vast area.There is no specific procedure.Historic and predictive information is the ...
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