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Companies/Organisations Articles
Page 53 of 59
Write the differences between mutual funds and stock.
The major differences between mutual funds and stock are as follows −Mutual fundsStockSimilar to shareholders and they own the fundPool of money collected from investorsThere is no possibilities of original issuesThere no nominal valueHave net asset valuesPartially paid or sometimes fully paidLow preferenceTraded once in a dayManaged by fund managerValue depends on net asset valueCommission can be paid at both entry and exit or either oneOwnership of a companyTwo stocks can have the same valueThere is a possibility of original issueThere is some nominal valueSome definitive numerical valueAlways fully paidHigh preferenceTrade throughout the dayManaged by investorsValue depends on price per ...
Read MoreDifferentiate stock and bonds.
The major differences between stock and bonds are as follows −StockPartial ownership of a public limited company is provided in exchange of monetary value.Known as stockholders.No guarantee of return on investment.No fixed profit on investment.Return earned in terms of dividends.Generally purchased through stock exchange.High risk on investment.Maturity time depend on investors.Equity.Traded through central exchanges.Shareholders get voting rights.BondBorrowed capital for an institution or organization.Known as bondholders.Guaranteed return on investment.Fixed profit earned.Return earned in terms of interest.Generally issued by government institutions, financial institutions, public undertakings, private institutions.Very low risk on investment.Fixed time of maturity (at time of purchases).Debt.Traded over the counter (OTC).Liquidation ...
Read MoreWrite the difference between debentures and bonds.
The major differences between debentures and bonds are as follows −DebenturesThe instrument used to raise long term finances.Issued by private companies.Known as debenture holders.Short term tenure.Debentures = assets – (Liabilities + shareholders reserve+ Bonds).They are both unsecure and secure in nature.High risk.Gives high interest rate.Liquidity is done after bond holders.Periodical payment structure.Can be convertible to equity shares.BondsInstruments which highlights the debt taken towards the holders.Issued by corporations, government agencies and financial institutions.Known as bondholders.Tenure is higher than debentures.Bonds = assets – (liabilities + shareholders reserve + debentures).They are secure in nature.Less risk compared to debentures.Gives you low interest.Liquidity bonds paid ...
Read MoreCompare shares and debentures.
The major differences between shares and debentures are as follows −SharesDebenturesOwned funds of the company.Represents capital of the company.Known as shareholders.Will get dividends.Deduction is not allowed.No security for payments.They have voting rights.Can’t be converted to debentures.No trust deedAppropriation of profit.High risk.Don’t lien on asset of the company.Don’t have leverage benefits.Disclosed in balance sheet as equity and liabilities column.Borrowed fund of the company.Represents debt of the company.Known as debenture holders.Gets interest.Deduction is allowed from profits.Security for payment is there.Can be converted into shares.Charge against profit.Trust deed is executed.Most secured.Have lien against assets of the company.Have leverage benefit.Not disclosed in balance sheet.
Read MoreDifferentiate between preference shares and debenture.
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 MoreDifferentiate between equity shares and preferred shares.
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 MoreWrite the difference between capital expenditure and revenue expenditure?
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 MoreCompare between accounting and bookkeeping.
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 MoreDifferentiate cash accounting and accrual accounting.
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 MoreCompare depreciation and amortisation.
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.
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