Wholesale sales vs retail sales

Most medium to large scale manufacturing and trading businesses engage a chain of distribution for the sale of their goods. This chain begins from the production factory and ends with sale of goods to the end consumer. Manufacturers sell goods to wholesalers/distributors who in turn sell to retailers who in turn sell to individual end … Read moreWholesale sales vs retail sales

Turnover vs profit

Financial reporting is an important aspect of every business entity as it is essential to gauge the financial performance and position of the entity. One of the important financial statements is the profit and loss account. Each profit and loss account reports amongst others two important parameters, what are popularly termed as ‘top line’ and … Read moreTurnover vs profit

Trade discount vs cash discount

Most businesses operate in a competitive environment today. This necessitates that they offer their products and services at competitive prices, to be able to sustain good sales volume. This is why vendors are often seen offering discounts to their customers. Any reduction in price offered by vendors to their customers is termed as ‘discount’. Discounts … Read moreTrade discount vs cash discount

FIFO vs LIFO

Inventory accounting and management are key functions in manufacturing and trading companies. Inventory consists of everything from raw material, production consumables to work in progress and finished goods. Large manufacturing and trading companies have considerable amounts invested in their inventories and thus its accounting and management assumes an even more important role. Inventory accounting involves … Read moreFIFO vs LIFO

Depreciation vs amortization

Fixed assets are resources that generate economic benefit for a business over a long duration, often across several accounting periods. Fixed assets are thus initially capitalized and subsequently a part of its cost is expensed out in each accounting period. This is also in line with the ‘matching concept’ in accounts which provides that expenses … Read moreDepreciation vs amortization

Difference between operating and non-operating expenses

Operating Expenses: Those expenses which a business incurs to run its day-to-day business operations but are not related to the production process directly are known as operating expenses. These expenses can be categorized as selling, admin, marketing, advertising expenses etc. Non-operating Expenses: Such expenses that are neither related to normal course of activities of a … Read moreDifference between operating and non-operating expenses