IMPORNTANT DIFFERNCES OF ACCOUNTING

Sunil K. M.com B.Ed, PGDFM,

1. Difference Between Trial Balance and Balance Sheet.

TRIAL BALANCE BALANCE SHEET
1. It includes both Debit and Credit Balances 1. It includes both Assets and Liabilities
2. It includes Opening Stock value 2. It includes closing Stock Value
3. It shows the summary of Ledger Balances 3. It shows the summary of Finance Positions

2. Difference Between Journal and Ledger.

JOURNAL LEDGER
1. It is the subsidiary book 1. It is the final book of account
2. The book of prime or original entry book 2. The book of second entry and statement of account
3. It does not have any side 3. It has two sides like, debit and credit side

3. Difference Between Assets and Liabilities.

ASSETS LIABILITIES
1. It provide a future economic benefit, 1. It present a future obligation.
2. It gets Depreciation 2. It doesn't get depreciation
3. It have fixed values and flucuating values 3. here Interest is charged

4. Difference Between Real A/c and Nominal A/c.

REAL A/C NOMINAL A/C
1.It consider Assets and properties 1. It consider Incomes and Expenses
2. It include long term transections 2.It includes short term transections
3. example building, land, furniture 3.example salary, rent, discount

5. Difference Between Cash Transactions and Credit Transactions.

CASH TRANSACTIONS CREDIT TRANSACTIONS
1. here the payment is settled immediately. 1. here the payment is settled at a later date.
2. there is no interest charged 2. the interest is charged at a fixed percentage
3. it is done between buyer and seller 3. it is done between debtors and creditors

6. Difference Between Fixed Assets and Floating Assets

FIXED ASSETS FLOATING ASSETS
1. It have specific values 1. It doesn't have specific values
2. It is used for long term finance 2. It is used for short term finance
3. It have Depreciation values 3.there is no depreciation is charged

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7. Difference Between Double Entry and Single Entry System.
SINGLE ENTRY SYSTEM
1. It is easy to ascertain and low cost
2. It is applicable to Sole trade concerns
3. Here difficult to find Error
DOUBLE ENTRY SYSTEM
1. It have procedure to ascertain and heigh cost
2. It is applicable to all business concerns
3. Here easy to find Error

8. Difference Between Receipts & Payments A/c and Income & Expenditure A/c.
RECEIPTS & PAYMENST A/c INCOME & EXPENDITURE A/c
1. It is a Real A/c 1. It is a nominal A/c
2. It doesnt include non cash items 2. It includes non cash items
3. It is the summary of Cash book 3. It is the summary of P&L a/c

9. Difference Between Out standing and Prepaid Expenses.

OUT STANDING EXPENSES PREPAID EXPENSES
1. It is the Due amount on expenses 1. It is the advance amonut on expenses
2. It should be added 2. It should be deducted
3. It is shown under Liabilities head in Balance sheet 3. It is shown under Assets head in Balance sheet

10. Difference Between Capital Receipts and Revenue Receipts

CAPITAL RECEIPTS REVENUE RECEIPTS
1. It is the Long term Incomes 1. It is the short term incomes
2. It is shown in Balance Sheet 2. It is shown in P&L a/c
3. Non Recurring items 3. Recurring items

11. Difference Between Capital Expenses and Revenue Expenses.

CAPITAL EXPENSES REVENUE EXPENSES
1. It is incurred on Long term Finance 1. It is incurred on Short term Finance
2. It is an Asset Account 2. It is an Expenses Account
3. It is a Non recurring item 3. It is a Recurring item

12. Difference Between Provisions and Reserves.

PROVISIONS RESERVE
1. It is arise from known liability 1. to retain some money from the profit to for future use
2. It cannot be used to pay off dividends 2. It can be used to pay off dividends
3. Known liabilities and anticipated losses 3. Increase in capital employed

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