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Difference Between Bank OCC A/C and Bank OD A/C

Bank OCC A/C vs Bank OD A/C

There are many types of bank accounts that people are not aware of as most of the customers have either savings accounts or current accounts only. Bank OCC A/C and Bank OD A/C are two special accounts that allow business owners have the facility of credit without having to formally apply for a loan. There are many similarities in these two types of account though there are also some differences. Let us take a closer look at both OCC A/C and OD A/C.

OCC A/C

OCC refers to Open Cash Credit and is applicable to SME entrepreneurs. In the case of OCC account, the holder of the account can have cash credit facility against his stocks and receivables. The purpose of the loan is to meet the shortfall in working capital of the SME. Different banks have different criterion to assess the limit of an OCC account. In a majority of cases, the OCC limit is calculated depending upon turnover of the SME. In some cases MPBF or cash budget system may be employed to assess the limit of such an account. Drawing to an OCC holder is based upon the position of raw materials, finished stock, receivables and the goods that are in process of manufacturing. It is not that drawings under OCC account are unsecured. For security, stocks and receivables may have to be attached with the bank. There are instances when bank may require collaterals in the form of land and machinery also. The limit of drawing is reviewed every year and may be extended depending upon the condition of SME.

OD A/C

OD account is simply a current account with the facility of overdraft that current account holders running a small business are entitled to in any bank. In some banks, this facility is available only upon request through an application by the account holder. Once set up, the account holder can issue a Cheque up to the limit prescribed even if he does not have money in his account and he is charged interest only on the overdrawn amount on which applicable interest rates are levied. OD is like a bank loan but is flexible in the sense that one can deposit money in the account and has to pay interest only on the difference between amount withdrawn and the amount remaining in his account.

Difference Between Statement of Affairs and Balance Sheet

Posted on October 27, 2014 by koshal

Statement of Affairs vs Balance Sheet
 

The key difference between Balance Sheet and Statement of Affairs is that the balance sheet is one among the financial statements, which presents the financial position of a particular business to a given date while, in contrast, statement of affairs summarizes the assets and liabilities of a particular business entity. Particularly, the financial position is measured considering the three main components: assets, liabilities and equity, in the balance sheet. The figures incorporated in the balance sheet help decision makers to identify the level of risk that the entity faces with. On the other hand, the results of the statement of affairs carry the level of insolvency, i.e. the amount of capital that will remain after settling down all the liabilities to a given date. Despite presenting book values of the assets and liabilities, this statement presents the recoverability of the investment done after settling all the obligations by selling off its assets.

What is a Balance Sheet?

Balance sheet, also known as the statement of financial position (for not for profit organizations), is an indicator of the financial position of a given entity to a specific date. It reports aggregate balances of assets, liabilities and equity accounts as the end of a certain period, usually a year. Balance sheet measures financial health of a business entity. Therefore, by analyzing balance sheet figures, the stakeholders can arrive at various decisions particularly for planning volatility of future earnings.

What is a Statement of Affairs?

Statement of affairs (SOA) is also identified as a record of financial position of a particular business entity at a given time. The key purpose of SOA is to afford relevant information for the interested parties such as shareholders, customers, employees, competitor, etc. Rather than exhibiting book values of the assets and liabilities, SOA considers the amount at which the organization can recover after selling off their assets and settling their outside obligations.

When looking at the similarities between Balance Sheet and Statement of Affairs one can say that both statements talk about financial position of a particular business entity in terms of liquidity.

What is the difference between Balance Sheet and Statement of Affairs?

Statement of Affairs vs Balance Sheet Summary

Balance sheet and statement of affairs are two statements prepared to assess the financial position of a particular business entity. Balance sheet is a mandatory requirement under accounting procedures, which is prepared by aggregating balances of all the ledger accounts. In contrast, statement of affairs presents the insolvency level of a business entity, emphasizing the net realizable and payable values of assets and liabilities. Both of these statements help decision makers to make financial and investment decisions in a substantial manner.

Difference Between Duty and Tariff

Duty vs Tariff
 

Duties and tariffs are both forms of taxes that are imposed on the import and export of goods to and from foreign countries. Since both are taxes, they are not voluntarily offered and are usually forced onto businesses and individuals. Duties and tariffs are quite similar to one another in their purposes and features, and the two terms are often used interchangeably. The article offers a clear explanation on each term and shows the major similarities between duty and tariff.

Duty

Duties are taxes that are levied by the government on goods that are imported into and exported from a country. Duties are imposed on certain types of goods and services, and the duty that applies to the good or service will vary with the nature of the goods being imported or exported. For example, the duty that applies to cigarettes, alcohol and vehicles maybe higher than the duty imposed on clothing, shoes, and towels. Import duties are paid to obtain permission from the country’s customs authority to import goods or services from other countries.

Duties are imposed for a number of reasons. The government could be trying to protect the economies domestic producers and small and medium enterprises from external competition. When duties are imposed, exported products become more expensive, and local products become more attractive to consumers. Another reason for import duties is to discourage imports. Imports can result in a balance of payments deficit, which is not healthy for a country’s economy. By imposing duties, the volume of imports can be reduced. However, the disadvantage in taking this measure is that countries may retaliate and in turn impose duties on their imports which will reduce a country’s export income.

Tariff

Tariffs are also taxes that are levied on goods and services that are imported to a country. Tariffs are used to amend trade policies by reducing the volume of imports through making imports expensive. Tariffs are imposed to collect government income, protect domestic small and medium firms and to reduce trade deficits. However, tariffs have some disadvantages. When tariffs are imposed on imported products, the local producers do not face much competition and will, therefore, become inefficient. Tariffs act as a safety bubble for these firms and, as long as tariffs are imposed, local industries will not strive to improve quality or reduce cost as much as exported products. Furthermore, tariffs are generally imposed only on imported goods and quite rarely on imported products.

What is the difference between Duty and Tariff?

Duties and tariffs are both taxes that a country’s government will impose on the import and export of goods and services. These terms are quite similar to one another and are most often used interchangeably. Both tariffs and duties are imposed for the same purposes which are to protect domestic industries and companies, earn government income, and reduce trade deficits. A duty can also refer to customs duty that is imposed on goods that are brought into a country by tourists and other individuals. While duties and tariffs can be beneficial to a country, there are also a few disadvantages. The main issues with these taxes are that they protect local producers too much, and by not exposing domestic producers to international competition, they will remain within the same quality standards and inefficiencies, and the industry as a whole will remain underdeveloped in comparison to more efficient foreign industries.

Summary:
Duty vs. Tariff
• Duties and tariffs are both forms of taxes that are imposed on the import and export of goods to and from foreign countries.
• Both tariffs and duties are imposed for the same purposes which are to protect domestic industries and companies, earn government income, and reduce trade deficits.
• Duties and tariffs are quite similar to one another, and these terms are most often used interchangeably.

Difference Between Duty and Tax

Duty vs Tax

Any government has many responsibilities to fulfil for the development of the country and its people. For this it needs resources and these resources come from various sources such as taxes and duties. Thus duty and tax are two important sources of revenue for the government. Both tax and duty are not voluntary contributions but are rather monetary burden laid upon people to support the functioning of a government. Money collected through duty and tax is used by the governments for various purposes such as the expenditure incurred on maintaining law and order, public works such as building roads and bridges, hospitals and schools, public transportation, pensions, social benefits for the people, paying salaries to government employees and nation’s security.

Duty

Duty is a type of tax that is levied upon goods imported from another country. It is also levied upon goods manufactured within the country such as excise duty. The word duty is mostly used in respect of goods such as custom duty, import duty, excise duty and so forth. Duty is levied only on goods and not on individuals. The most common example of duty is custom duty which is an indirect tax levied upon goods that are purchased from foreign countries and the buyer has to pay tax on them when they enter the country. Similarly, duty that is imposed upon goods going out of the country is called export duty.

Tax

Taxes are levied by a government to fulfil its obligations towards the citizens. They are the backbone of all the revenues generated by any government. Thus the money collected by the government from the private sector comes within the purview of taxes which includes duties. Taxes are obligatory and not involuntary which means that a person is punishable by law if he fails to pay his taxes.

Taxes can be direct or indirect such as income tax which is a direct tax and VAT which is an indirect tax. Irrespective of the nature of taxation, the money collected is used by the government for four main purposes or the four R’s

Revenue

Government generates its income through taxes to spend on roads, bridges, army, schools, hospitals, legal system, salaries, pensions and law and order.

Redistribution

This pertains to social engineering which means taking money from rich sections of the population and distributing between weaker sections.

Re-pricing

This is done to discourage use of certain items like tobacco and alcohol.

Representation

This refers to the accountability of the government towards its citizens.

Differences between Duty and Tax

- Both duty and tax are the revenues generated by a government for its effective functioning. Duty in broader terms is a kind of tax only. But there are differences between the two entities.

- Duty is levied upon goods only, whereas tax is levied on both goods and individuals.

- Tax is a term used in respect of income such as property tax, wealth tax, income tax etc, whereas duty is used in terms of goods only such as customs duty, excise duty.

- Duty is generally a tax levied on good going out or coming inside a country. Duties are sometimes referred to as border taxes.

- Higher duties are levied on some categories of products to discourage people from using them. Taxes are mostly progressive in nature

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