Key Difference – Fixed Capital vs Working Capital The key difference between fixed capital and working capital is that fixed capital refers to long-term investments that are not consumed during the production process whereas working capital deals with short-term liquidity (how conveniently an asset can be converted into cash) position in a company. Both […]
Difference Between T Account and Ledger
Key Difference – T Account vs Ledger The key difference between T account and ledger is that T account is a graphical representation of a ledger account whereas ledger is a set financial accounts. Therefore, a ledger can also be interpreted as a collection of T accounts. Understanding T accounts and ledger is essential […]
Difference Between Cost Effectiveness Analysis and Cost Benefit Analysis
Key Difference – Cost Effectiveness Analysis vs Cost Benefit Analysis The key difference between cost effectiveness analysis and cost benefit analysis is that cost-effectiveness analysis compares the relative costs and outcomes (effects) of a project whereas cost benefit analysis assigns a monetary value to the measure of the effect of a project. The use of these […]
Difference Between Prime Cost and Conversion Cost
Key Difference – Prime Cost vs Conversion Cost The key difference between prime cost and conversion cost is that prime costs are the costs that can be directly traceable to production units whereas conversation costs are the other related costs of production that cannot be conveniently recognized against a unit of output. Knowledge of […]
Difference Between Direct Write Off Method and Allowance Method
Direct Write Off Method vs Allowance Method If a customer defaults the payment, this will be called a ‘bad debt’. When an account is deemed to be uncollectible, the company must remove the receivable from the accounts and record an expense. This is considered an expense because bad debt is a cost to the […]
Difference Between Options and Swaps
Key Difference – Options vs Swaps Both options and swaps are derivatives; i.e. financial instruments whose value depends on the value of an underlying asset. Derivatives are used to hedge financial risks. The key difference between option and swap is that an option is a right, but not an obligation to buy or sell […]
Difference Between Interest Only and Capital Repayment Mortgage
Interest Only vs Capital Repayment Mortgage Mortgages are a common type of option used to borrow funds by the use of an asset/property as security. Interest only and capital repayment mortgage are two different types of repaying the mortgage. The key difference between interest only and capital repayment mortgage is that interest only mortgages […]
Difference Between Accounts Receivable and Notes Receivable
Key Difference – Accounts Receivable vs Notes Receivable The key difference between accounts receivable and notes receivable is that accounts receivable is the funds owed by the customers whereas notes receivable is a written promise by a supplier agreeing to pay a sum of money in the future. These are two principal types of […]
Difference Between Lending Rate and Borrowing Rate
Key Difference – Lending Rate vs Borrowing Rate The key difference between lending rate and borrowing rate is that lending rate is the rate banks and other financial institutions use to lend funds in the form of loans to their customers whereas borrowing rate is the rate at which commercial banks borrow from the […]
Difference Between Cash Rate and Interest Rate
Key Difference – Cash Rate vs Interest Rate The key difference between cash rate and interest rate is that cash rate refers to the rate at which commercial banks borrow funds from the central bank whereas interest rate refers to the rate at which a financial charge is received\paid on saved or borrowed funds. […]
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