Differences Between Various Items in Accounting

Expense	Expenditure
Money spent for to get short term benefit	Money spent for to get Long term benefit
It is Nominal A/C and in recurring nature	It is Real A/C and in non recurring nature
It comes in P&L Debit side	It comes in Balance sheet Asset side
Generally smaller in amount	Generally bigger in amount
Ex. Rent, Salary, Telephone,	Ex. Purchase of Land, Buildings, Machinery

MEMORANDUM	ARTICLES
It is a primary document	It is Secondary document
It is subordinate to the Act	It is subordinate to MOA & the Act
It is a must for every Company	Can be written or taken from Company Act
Strict provisions for alteration	Special Resolution is sufficient except where the amendment brings in to effect a private from public
Ultra virus MOA even all the members. Cannot ratify it	Ultra virus AOA but intra virus the MOA can be Ratified

SHARES	DEBENTURE
Shares are a part of the capital of the company	Debentures contribute a loan
Share holders are members or Oweners of the compny	Debenture holders are creditors
When recommended by the Board dividend could be declared to share holders	Fixed amount of Intrest on debentures paid before dividend declaration
Shares do not carry on any charge	Debentures generally have a charge on the asset of the company
Shares have restrictions Issue at a discount	Debentures do not have Restrictions Issue at a discount
Share holders have voting Rights	Debenture holders do not have voting rights
Dividend is payable only when profits are there	Dividend is payable whether profits are there or not
No fixed dividend	Rate of Intrest is fixed

SHARE HOLDER	DEBENTURE HOLDER
One of the owners of the Company and has proprietory intrest in the Company	Only a creditor of the Company
When the Company makes profits and the board recommends, share holder gets a share in the profits	Gets a fixed rate of Intrest whether the Company makes profit
No security for his Investment	Normally debentures are security
Eligible for voting rights	No voting Rights
On liquidation, share holders are paid last	Ranks priority with regard repaid

SHARE	STOCK
Has a nominal value	No Nominal value
May be fully paid or partly paid	Always fully paid
Can be transferred is whole numbers and not in fractions	Can be transferred in fractions
Each and every shares shall be of equal denomination	May be of unequal amount
Shares are identified with distinctive numbers	Do not have any distinctive numbers
Can be issued directly to the public	Only fully paid up shares can be converted in to stock and cannot be issued Directly

PROMISSORY NOTE	BILL OF EXCHANGE
In a pro-note there is a promise to pay	In a bill there is an order to pay
In a pro-note there are two parties the maker and the payee	In a bill there are there parties 1. Drawer  2. Drawee 3. Payee
Pro-note cannot be made payable to the maker himself	In a bill the drawer and the payee may be the same
The maker a pro-note is primarily liable	The maker of a bill is liable only when the Drawee does not accept or pay
A pro-note is signed by the person liable to pay. so no acceptance is needed	A bill has to be accepted by the Drawee before he can be held liable

JOURNAL	LEDGER
Journal is the book of first or original entry. It is also called the Book of first entry	The ledger is the Book of second entry
Transaction in the Journal will be recorded Immediately	Depending upon his conveniences the trader Records of the transaction in the ledger
When once the entries are posted to ledger the Journal Looses its Importance	It will never Loose importance as it is the main book of Accounts which is relied upon permanently
In the preparation of final A/Cs Journal is not useful	In the preparation of trial balance and final A/Cs Ledger is a must
The tax authorities generally may not depend on Journal	In the finalization of income tax to be paid, the tax authorities depend on ledger.

TRIAL BALANCE	BALANCE SHEET
The trial Balance is prepared to check the arithmetical accuracy of the Books of Accounts	Balance sheet is prepared to knowledge true position of Assts and liabilities particular date
Trial balance doesnot show the financial position of business	The financial position can be knowledge from balance sheet
The trials balance is prepared based on the Ledger Accounts	The balance sheet is prepared on the base of information from trial balance
The preparation of trial balance is not compulsory	The preparation of balance sheet is must
Trial balance cannot be shown as a documentary evidence	But balance sheet will be accept documentary evidences by tax authorities and courts

PROFIT & LOSS ACCOUNT	BALANCE SHEET
Objective of preparing P&L A/C to ascertain the Net profit cost it loss of the business during the year	The objective of preparing balance sheet is to know financial position of the business on a specific date
Is an account having debit and credit as such “TO” and “BY” are used recorded in the P & L A/C	Balance sheet is a statement and hence “TO” and “BY” are not used
Revenue expenditure and Incomes are accorded in the P & L A/C	Capital Incomes and expenditures are shown in the balance sheet
Balancing figure of this Account either net profit or Net loss	Balance sheet will not show any balancing figure. A total of liabilities and Assets side should always be equal

SHARE CERTIFICATE	SHARE WARRANT
The holder is a registered member of the compound	The bearer of a shares warrant is not a registered member
The holder of a share certificate is essentially a member	The bearer of a share warrant can be a member only if the article so provided in AOA
For the issue of share certificate may required approval of the central Govt.	Share warrant can be issued central Govt. approval is must
All Companies must issue share certificates	Share warrants can be only by public companies
Share certificate is issued is partly (or) fully paid shares	Share warrant can be issued only fully paid shares
Share certificate in not negotiable	Share warrant is negotiable
The holder of a share certificate can present a petition for winding up	The holder of a share warrant can not present a petition winding up