Business

Difference Between Cost Accounting And Financial Accounting

Difference Between Cost Accounting And Financial Accounting

Definition of Cost Accounting – Cost Accounting is the field of accounting that is used to record, summarize, and report the cost information on a periodical basis. Its primary function is to ascertain and control costs. It helps the users of cost data to make decisions regarding the determ.....

Read More »

Regulatory Capital

Regulatory Capital

A Regulatory Capital (also known as capital adequacy) is the amount of capital a bank or another financial institution has to have as required by its financial regulator. These are standardized regulations in place for banks and other depository institutions that determine how much liquid capital.....

Read More »

Difference Between Micro And Macro Economics

Difference Between Micro And Macro Economics

Economics is divided into two important sections, they are: macroeconomics & microeconomics Definition of Micro Economics – Microeconomics is the study of particular markets, and segments of the economy. It looks at issues such as consumer behavior, individual labor markets, and the the.....

Read More »

Capital Adequacy Ratio (CAR)

Capital Adequacy Ratio (CAR)

Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk-weighted assets and current liabilities. It is also known as Capital to Risk (Weighted) Assets Ratio (CRAR), which is the ratio of a bank’s capital to its risk. It is a measurement of a bank’s avai.....

Read More »

Difference Between Available Balance And Current Balance

Difference Between Available Balance And Current Balance

The simple answer would be: Current balance = our actual balance Available balance = the amount we can draw on, meaning use For example, we have a current balance in our account of $200, but $30 of it is a check that was deposited but hasn’t cleared yet. So until that check clears, we only [&he.....

Read More »

Tier 2 Capital

Tier 2 Capital

Tier 2 capital includes a number of important and legitimate constituents of a bank’s capital requirement. It is designated as supplementary capital and is composed of items such as revaluation reserves, undisclosed reserves, hybrid instruments, and subordinated term debt. It is the seconda.....

Read More »

Difference Between Compounding And Discounting

Difference Between Compounding And Discounting

Definition of Compounding – When interest is earned on the principal and the entire amount is again invested to earn more money that is called compounding. Usually, when money is invested with a bank or a credit firm, they compound interest in a fixed time period. This could be weekly, mont.....

Read More »

Tier 1 Capital

Tier 1 Capital

Tier 1 capital is the primary funding source of the bank. It is the core measure of a bank’s financial strength from a regulator’s point of view. It is a bank’s core capital and includes disclosed reserves—that appears on the bank’s financial statements—and equity capi.....

Read More »

Credit Rating Agency

Credit Rating Agency

A credit rating agency is a private company that looks at the creditworthiness of a large-scale borrower, such as a company or country. It is a company that assigns credit ratings, which rate a debtor’s ability to pay back debt by making timely principal and interest payments and the likel.....

Read More »

Letter of Hypothecation

Letter of Hypothecation

Letter of Hypothecation is a written agreement, which authorizes a bank or lender to repossess and sell the pledged item in case of a default. An instrument that gives a firm, banker or a person a lien over goods in consideration for advances of money is known as a letter of hypothecation. It mea.....

Read More »

Disadvantages of Net Present Value (NPV)

Disadvantages of Net Present Value (NPV)

The net present value (NPV) method can be a very good way to analyze the profitability of an investment in a company or a new project within a company. NPV is a useful starting point but it’s not a definitive metric that an investor should rely on for all investment decisions as there are s.....

Read More »

Reserve Requirement – a Central Bank Regulation

Reserve Requirement – a Central Bank Regulation

The reserve requirement is the total amount of funds a bank must have on hand each night. This is a regulation that sets the minimum amount of money that banks must hold in reserve. It is a central bank regulation that sets the minimum amount of reserves that must be held by a commercial bank. [&.....

Read More »