Here, I am providing the detail of difference between Investment and Loan:
1.Investmentis one of Basics ofFinance. It means, if anybody will ask about the basics of finance, you have to tell investment is one of basics of finance. But loan is source of finance. If we have not money or fixed asset, we can finance it through getting loan from banking and financial institutions.
2.Accounting treatment of investmentis different from accounting treatment of loan. Suppose, you have your personal contractual business. You bring your capital in business and after this you have started to earn money through dividend . For this, you have bought 5000 shares of XYZ company.This is your investment in shares and it will go to balance sheet asset side. But if you have not sufficient money to buy the 5000 shares and you take some money from other party on interest. That payable amount will be your loan and it will be shown as liability in balance sheet. Sometime, you can give loan to other. Basically, it is your investment. But, you can show it in Loan and Advance as Asset.
3. On the basis of difference between investment and loan, board of directors are playing the game in business on equity. You have read infinancial management,that it is the duty of management to get loan at cheap rate, lower risk and control and risk and invest it at higher profit at lower risk. What did you get idea after reading financial statement. I have only one idea. Loan is power of business for taking the challenge to get high yield on same amount invested in any other project.