Differences between Business terms of Class 12

To understand the meaning of any term you also need to know the things that are not included in the meaning of that term. So, knowing the difference between two terms will clarify the meaning of both terms. With the help of the Differences between Business terms of the Class 12 chapter, you will understand the meaning of various terms of Business studies for class 12.

Table of Contents

Liabilities vs. Expenses

What are Liabilities?

What are Expenses?

Conclusion

Differences between Business terms of Class 12 – Business Studies

Understanding the complex world of business can be challenging, especially for Class 12 students. That’s why it’s crucial to get familiar with some key business terms that can help you navigate this field. To help you with this, let’s dig into the differences between some common business terms that are integral to the class 12 curriculum.

Profit vs. Revenue

These two terms are often used interchangeably but they represent completely different financial concepts.

What is Revenue?

Revenue refers to the total amount of money a company generates from its business activities before any expenses are deducted. It’s often referred to as the “top line” on a company’s income statement.

What is Profit?

Profit, on the other hand, is what’s left over from revenue after all business costs have been deducted. These costs include operational expenses, taxes, and cost of goods sold (COGS). Profit is often called the “bottom line.”

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Shares vs. Stocks

Shares and stocks are another set of terms that can often cause confusion, especially for those new to the world of finance and business.

What are Shares?

Shares represent a portion of ownership in a company. When you buy shares, you essentially become a partial owner of the company. The more shares you own, the greater your ownership stake in the company.

What are Stocks?

The term ‘stocks’, however, is a more general term used to describe the ownership certificates of any company. In general terms, if you own stock, you own a piece of the company. Therefore, while all shares are stocks, not all stocks are shares.

Liabilities vs. Expenses

Liabilities and expenses are two more terms that often get mixed up. They both relate to money that a business owes, but they are different in important ways.

What are Liabilities?

Liabilities are the debts and obligations that a business owes. This can include loans, mortgages, accrued expenses, and accounts payable. Liabilities are a fundamental part of a company’s financial health and are listed on a company’s balance sheet.

What are Expenses?

Expenses, on the other hand, are the costs incurred in the process of running a business. This can include rent, salaries, utilities, and advertising costs. While expenses can create liabilities (like when a company buys goods on credit), not all liabilities are expenses.

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Conclusion

Understanding the differences between these key business terms is crucial for class 12 students studying business. By understanding these terms, you can gain a better understanding of how businesses operate and make financial decisions. This foundation can be instrumental in your future business studies and career.

Futher you can Also check out the difference between various terms of Financial Accountancy for Class 12 and Business Economics For Class 12.

Differences between Business terms of Class 12 – Business Studies

We have covered all of the Differences between Business terms of Class 12 which will help you to clear your doubts about various topics. So please read the all differences one by one.