Key Difference – Accrued Expense vs Accounts Payable Accrued expense and accounts payable are two important item recorded in the balance sheet of companies. The key difference between accrued expense and accounts payable is that while an accrued expense is an expense recognized in the accounting books for the period it is incurred whether […]
Difference Between Deferred Revenue and Recognized Revenue
Key Difference – Deferred Revenue vs Recognized Revenue There are a number of variations with regard to revenues based on the conditions they are been recorded. Deferred revenue and recognized revenue are two such types of revenues that may be confusing. The key difference between deferred revenue and recognized revenue is that in deferred […]
Difference Between Cost of Sales and Cost of Goods Sold
Key Difference – Cost of Sales vs Cost of Goods Sold Cost of sales and cost of goods sold are two terms that are often used interchangeably. Both cost of sales and cost of goods sold records the cost incurred to produce goods, to purchase goods, to sell to the end customer or to […]
Difference Between Cost of Equity and Cost of Debt
Key Difference – Cost of Equity vs Cost of Debt Cost of equity and cost of debt are the two main components of cost of capital (Opportunity cost of making an investment). Companies can acquire capital in the form of equity or debt, where the majority is keen on a combination of both. If […]
Difference Between Operating Income and Net Income
Key Difference – Operating Income vs Net Income Income can be simply referred to as the difference between total fund inflows less total expenses for a business. All companies thrive to make higher profits. Profits can be calculated from the main business activity, after considering all other incomes and expenses. Operating Income and Net […]
Difference Between Profitability and Liquidity
Key Difference – Profitability vs Liquidity Profitability and liquidity are two very important financial metrics to all businesses and should be given increased emphasis to maintain them at desirable levels. Liquidity can be seen as a major contributor to long-term profitability. The key difference between profitability and liquidity is that while profitability is the […]
Difference Between Profit and Profitability
Key Difference – Profit vs Profitability Profit and profitability are two terms used in accounting that have similar underlying principles. Earning a higher profit and being profitable is the main objective of companies established with a profit focus. The key difference between profit and profitability is that while profit is the net income made […]
Difference Between Residual Income and EVA
Key Difference – Residual Income vs EVA Evaluating investment opportunities is important in order to realize the respective costs and benefits of each investment option. Residual Income and EVA (Economic Value Added) are two methods that assess how much funds in excess of the business’ cost of capital the investment is projected to generate. […]
Difference Between Historical Cost and Fair Value
Key Difference – Historical Cost vs Fair Value Historical cost and fair value are two key methods of recording non-current assets and financial instruments. For non-current assets, companies have the discretion to use historical cost or fair value whereas financial instruments are generally recorded at fair value. The key difference between historical cost and […]
Difference Between Realized and Recognized Income
Key Difference – Realized vs Recognized Income Realized income and recognized income are generally two confusing concepts since different companies use both these methods to report income. Whether a business realizes or recognizes its earnings as income depends on whether it uses the accrual method or the cash method of accounting. The key difference […]
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