Main Differences

Difference Between Product Layout And Process Layout

Product layout (also known as straight line layout) refers to the arrangement of production facilities such as machines, equipment, devices and materials in the sequential order. On the other hand, process layout ( also known as functional layout) is a type of floor arrangement where machinery, equipment and devices of similar processes or functions are grouped together.


Difference Between Product And Process Layout


The main dissimilarities or differences between product layout and process layout can be described as follows:


1. Introduction


Product Layout: It is a type of floor arrangement where machines and equipment are installed in sequential order.

Process Layout: It is a type of layout where machinery and devices of similar functions are grouped together.


2. Used For


Product Layout: This layout is used for the production of standardized products in large quantity.

Process Layout: It is used to produce diversified products in small quantity.


3. Space Required


Product Layout: It requires less space than process layout because all the production facilities are installed in the single floor.

Process Layout: This type of layout requires more floor space because separate workstation is required for different process or function.


4. Investment Required


Product Layout: This floor arrangement requires high investment to acquire plant and machinery. But it requires less working capital.

Process layout: It requires less capital than product layout because it avoids duplication of machines. But it requires more working capital.


5. Cost Of Production


Product Layout: Because of continuous production, large volume of output and less material handling costs it lowers the cost of production.

Process Layout: Because of long processing time, small volume of output and more wastage, cost of production will be higher in this layout.

difference-between-product-process-layout

6. Flexibility


Product Layout: It lacks flexibility. So, it is difficult to make changes and adjustments.

Process Layout: It is more flexible than product layout. So, changes and adjustments can be made easily.


7. Scope For Expansion


Product Layout: Because of inflexibility, there is less scope for expansion.

Process Layout: There is high scope of expansion because this layout more flexible.


8. Production Time


Product Layout: Because of smooth workflow, sequence of operation and less movement of materials, it requires less production time.

Process Layout: Because of variable workflow, more movement of materials from one process to another it takes more production time.


Also Read:

Advantages and disadvantages of product layout

Advantages and disadvantages of process layout


9. Risk Of Interruption


Product Layout: There is high chance of interruption in production process. It may be seriously affected due to breakdown of machinery, fluctuation in power supply etc.

Process Layout: Machine breakdown or system maintenance do not interrupt the whole production process.


Product Layout Vs Process Layout ( Comparison Table)


Basis

Product Layout

Process layout

Space Needed

Less

More

Flexibility

No

Yes

Production Cost

Less

High

Investment

High

Less

Production Time

Less

More

Scope For Expansion

No

Yes


Distinction Between Product Layout And Process Layout In Short:


- Product layout is useful for the production of standardized products. But process layout is used for diversified products.

- Product layout needs huge initial investment. Process layout requires less capital investment.

- Product layout is less flexible than process layout.

- Product layout can be set up in small floor space. But process layout require more space.

- There is a high possibility of interruption in production process in product layout. On the other side, there is less chance of interruption in process layout.

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Difference Between Management Audit And Financial Audit

Accounting , Finance
Introduction And Meaning Of Management Audit

Management audit is a process of examining the performance and managerial efficiency in the organization. It evaluates the performance of all levels of management and helps to find out the deficiencies and defects. It provides proper suggestions and guidance for maintaining better organizational structure that helps to achieve organizational goals and objectives.

Introduction And Meaning Of Financial Audit

Financial audit is a process of analyzing the financial affairs of the firm. It helps to detect the errors and frauds in the book of accounts. It reports the financial performance (profit or loss and financial position) of the business. It is helpful for the  management to make future financial plans and policies.

Difference Between Management Audit And Financial Audit


The major dissimilarities or difference between management audit and financial audit can be highlighted as follows:

1. Introduction

Management Audit: It is an act of evaluating and analyzing the efficiency of each level of management such as decision making power, employee relation and competencies of management.
Financial Audit: It is an act of examining and analyzing company's financial aspects such as financial statements, vouchers and books of accounts to ensure the accuracy and validity.

2. Nature

Management Audit: It is qualitative in nature because it evaluates non-financial aspects of the firm.
Financial Audit: It evaluates only financial aspects of the business. So, it is quantitative in nature.

3. Compulsion

Management Audit: It is not compulsory to conduct management audit.
Financial Audit: Every manufacturing and mining companies should conduct financial audit.

4. Objective

Management Audit: The main objective of management audit is to measure effectiveness, quality of decision making and executive performance of management.
Financial Audit: The main objective of financial audit is to ensure arithmetical accuracy and fairness of books of accounts of the company.
difference-management-financial-audit

5. Useful For

Management Audit: It is useful for top level management and proprietors to measure actual performance with predetermined standards. 
Financial Audit: It is useful for shareholders and investors to know the financial position of the company.

       Also Read: 

6. Performed By

Management Audit: It is performed by a team of employee and independent consultant appointed by the management.
Financial Audit: It is performed by a professional chartered accountant.

7.  Conducting Period

Management Audit: It can be conducted at any time as per the need or wish of the company.
Financial Audit: It is conducted at the end of accounting period after the preparation of financial statements.

Management Audit Vs Financial Audit (Comparison Chart)

Basis
Management Audit
Financial Audit
Introduction
Act of evaluating performance of each level of management
Act of evaluating the correctness of the books of accounts of the firm
Nature
Qualitative
Quantitative
Compulsory Or Not 
Not compulsory
It is compulsory
Objective
To measure the strength or weakness of management
To ensure the arithmetic accuracy of the books of accounts
Useful For
Management or proprietors 
Shareholders or investors
Conducted By
Team of employees and consultant
Professional chartered accountant
Period
As per the need of the company
At the end of accounting period.

Distinction Between Management Audit And Financial Audit In Short:
- Management audit evaluates the operational efficiency, but financial audit evaluates the financial records of the business.
- Management audit finds out the weakness and deficiencies of  organizational procedures and processes, financial audit detects the errors and frauds in the accounting process. 
- Management audit can be performed as per the wish of the top level management. But Financial audit should be conducted after the preparation of financial statements at the end of the financial year.
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Difference Between Cost Audit And Financial Audit

Accounting , Business
Introduction To Cost Audit

Cost audit is a process of examining the cost records and statements to ensure the accuracy and to evaluate the operational efficiency of the company. It analyzes cost records, accounts and cost documents that helps to identify the areas of improvement.

Introduction To Financial Audit

Financial audit is a process of examining and verifying the financial transactions recorded on the company's books of accounts and financial statements. It helps to ensure the accuracy, reliability and validity of firms's financial records such as vouchers, financial documents and records.

Difference Between Cost Audit And Financial Audit 

The main dissimilarities or difference between cost audit and financial audit can be highlighted as follows:

1. Introduction

Cost Audit: It is the act of examining cost aspects (cost records and cost statements) of the firm in order to ensure the accuracy.
Financial Audit: It is the act of examining financial aspects (financial statements, books of accounts and vouchers) in order to ensure the correctness and validity of transactions.

2. Performed By

Cost Audit: Auditing task is performed by a competent cost accountant appointed by the management or board of directors.
Financial Audit: Auditing task is performed by a professional chartered accountant appointed by investors or shareholders.

3. Objectives

Cost Audit: The main purpose of conducting cost audit is to verify cost records and to analyze operational efficiency of the firm.
Financial Audit: The main purpose of conducting financial audit is to ensure the correctness and fairness of financial statements and other books of accounts.

4. Compulsion

Cost Audit: All companies should conduct cost audit because it is compulsory for all types of organizations.
Financial Audit: It is compulsory for manufacturing companies only.
difference-cost-financial-audit

5. Useful For

Cost Audit: It is useful for the management.
Financial Audit: It is useful for shareholders or investors.

       Also Read: 

6. Submission Of Report

Cost Audit: Report of cost audit is submitted to the board of directors.
Financial Audit: Report of financial audit is submitted to the shareholders at annual general meet.

7. Suggestion

Cost Audit: It is forward-looking in nature. So, it provides suggestions for future by analyzing past performance.
Financial Audit. it is known as postmortem audit because it only evaluates past activities but does not provide any suggestion for future.

Cost Audit Vs Financial Audit (Comparison Chart)

Basis
Cost Audit
Financial Audit
Introduction
Act of examining cost aspects of the firm
Act of examining financial aspects of the firm
Performed By
Cost Accountant
Chartered Accountant
Compulsory
For all types of companies
Only for manufacturing companies
Useful For
Management
Investors
Submission Of Report
To the board of directors
To the shareholders
Purpose
To analyze operational efficiency
To ensure fairness and correctness of financial records
Provide Suggestions?
Yes
No


Distinction Between Cost Audit And Financial Audit In Short

- Cost audit is concerned with the verification of cost records and cost statements of the firm, but financial audit is concerned with the financial aspects such as financial statement and books of accounts of the firm.
- Cost audit can be conducted by a cost accountant. But financial audit is conducted by a chartered accountant.
- Cost audit analysis the operational efficiency of the organization. On the other side, financial audit examines the correctness of the books of accounts.
- Report of cost audit is useful for the management to identify the area of improvement. Report provided by financial audit is useful for investors and shareholders to know the financial strength of the company
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Difference Between Liquidity And Profitability

Business , Finance
What Is Liquidity ?

Liquidity means availability of cash and assets and securities that can be converted into cash instantly in the firm. Maintaining high liquidity helps the company to meet its daily financial needs and to cover short-term financial obligations. It shows the cash position of the business.

What Is Profitability?

Profitability means the amount of profit earned by the firm in a specific period of time. It can be determined by subtracting total expenses from total revenue of the business. Therefore, profitability reflects the financial performance of the company.

Difference Between Liquidity And Profitability

The major dissimilarities or difference between liquidity and profitability can be highlighted as follows:

1. Introduction

Liquidity: It refers to available cash or cash equivalents (assets or securities that can be converted into cash quickly) which helps to cover short term liabilities.
Profitability: It is a profit (Total revenue - Total expenses) made by a business firm in a certain period of time.

2. Shows

Liquidity: It shows the cash position or availability of cash in the firm.
Profitability: It shows the financial performance of the firm.

3. Calculation

Liquidity: It is calculated with the help of current ratio, quick ratio, acid test ratio, interest coverage ratio etc.
Profitability: It is calculated with the help of gross profit margin, net profit margin, return on capital employed etc.
difference-between-liquidity-profitability



     Also Read: 

4. Importance

Liquidity: It is important to meet short term liabilities of the firm.
Profitability: It is important for long run survival of the firm.

Liquidity Vs Profitability (Comparison Chart)

Basis
Liquidity
Profitability
Introduction
available cash or cash equivalent in the firm
Profit made by a firm in a certain period
Shows
Cash Position
Financial performance
Ratios
Current, quick, acid test, internal coverage etc.  
Net profit margin, gross profit margin, return on capital employed etc.
Importance
Short term
Long term

Distinction Between Liquidity And Profitability In Short:

- Liquidity helps to measure the cash position of the company, on the other hand, profitability measures the financial performance of the company.
- Liquidity is important to meet short-term liabilities. But profitability is important in the long-run of the firm.
- Current ratio and quick ratio are used to determine the liquidity of the business firm. Gross profit margin and net profit margin are used to determine the profitability.
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Difference Between Operating And Non-Operating Expenses

Accounting , Business
Introduction

Those costs which are incurred to perform daily business activities are known as operating expenses such as staffing costs, marketing and advertising costs, rent, salaries etc. On the other hand, non-operating expenses refer to those costs that are not directly related to the day-to-day business activities such as depreciation, interest, restructuring costs etc. 

Difference Between Operating Expenses And Non-operating Expenses

The main dissimilarities or difference between operating expenses and non-operating expenses can be described as follows:

1. Meaning

Operating Expenses: All costs incur to perform daily business activities (not cost of good sold) such as salaries, administrative expenses, advertising, rent etc. are known as operating expenses.
Non-Operating Expenses: Those costs which are not related to direct business activities such as interest payment, depreciation, restructuring costs etc. are known as non-operating expenses.

2. Predictable Or Not

Operating Expenses: These costs are essential for smooth functioning of regular business operations. So, operating expenses are predictable costs.
Non-Operating Expenses: These costs are not predictable because non-operating expenses are not related to daily business activities.

3. Controllable Or Not

Operating Expenses: These are controllable costs. Management can minimize operating expenses by using cost control and cost reduction techniques.
Non-Operating Expenses: These are uncontrollable costs. So, management cannot minimize non-operating expenses.

4. Occurrence Frequency

Operating Expenses: These costs incur regularly (more frequently than non-operating expenses) because these are directly related to business operation.
Non-Operating Expenses: These costs do not incur regularly like operating expenses because these expenses are not related to business operation.

5. Record In Income Statement

Operating Expenses: These costs are recorded at the top (under cost of goods sold) while preparing income statement of the firm.
Non-Operating Expenses: These costs are recorded at the bottom of the income statement.
difference-between-operating-non-operating-expenses


6. Examples

Operating Expenses: Salaries, operational expenses, rent, marketing costs, etc. are some examples of operating expenses.
Non-Operating Expenses: Interest payment, loss on sale of fixed assets, restructuring costs, depreciation amount etc. are some examples of non-operating expenses. 

Operating Expenses Vs Non-operating Expenses
(Comparison Chart)

Basis 
Operating Expenses
Non-Operating Expenses
Introduction
Costs that are directly related to daily business operation
Types of costs that are not related to daily business operation
Predictable
Yes
No
Controllable
Yes
No
Frequency
More
Less
Recording
At the top of income statement
At the bottom of income statement
Examples
Administrative expenses, salaries, advertising etc.
Depreciation, amortization, interest payment etc.

Distinction Between Operating Expenses And Non-operating Expenses In Short

- Operating expenses are directly tied to daily business operations. But non-operating expenses are not directly involve in operational activities of the firm.
- Operating expenses affect the profitability of the company. Non-operating expenses does not impact the profitability.
- Operating expenses are predictable. On the other hand, non-operating expenses cannot be predicted. 
- Operating expenses are posted on the top and non-operating expenses are posted on the bottom while preparing the income statement.
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