Railway Accounts Department Examinations

Showing posts with label Interest. Show all posts
Showing posts with label Interest. Show all posts

Saturday, March 31, 2018

Differences between Dividend and Interest

                             (2016 Books & Budget- Without Books -5 marks)

                                                                                                Differences between
1. It is the return paid by the organisation to its owners/shareholders for the capital invested by them
1. It is the charge paid to the Lender at specified rate and intervals , for the use of money.
2.  Appropriation of Profit.  That means it is distributed to the shareholders/owners only, if profit is available.
2. Charge against Profit.  That means irrespective of profit available or not, it is an expense.
3. Paid to Shareholders/Owners
3. Paid to the Lenders/Creditors/Debenture Holders
4. It is not fixed.  It is depends on the available of profit after charging all legitimate expenses and at the discretion of Management.
4. It is fixed and paid at regular intervals as agreed mutually by the Lender & Borrower.
5. Not eligible for tax deduction
5.Eligible for tax deduction.
6. It is not a expense to the Organization
6. It is an expense to the Organization
7.There is no liability on the Organization, If payment of Dividend is not made.
7. If payment of interest is not made, the Organization will face legal consequences.