What Do You Mean By Finance? | Types | Transaction Management - EPrajatantra

 What Do You Mean By Finance?

What Do You Mean By Finance?

The word "finance" means money management. It also means the process of getting money when you need it. Finance includes the oversight, creation, and study of money, banking, credit, investments, assets and liabilities that make up financial systems.

Many basic concepts in finance come from two different types of economics. One of the most basic theories is the time value of money, which means that one dollar today is worth more than one dollar in the future.

Types of Finance

There are three main categories in the finance field. They are personal finance, corporate finance, and public (government) finance.

Personal finance

Financial planning helps you get ready for the future. You will need money to do what you want, but there are also limits on how much money you can use. Financial plans depend on your earnings, your living needs, your goals and your dreams.

People need to save money for their retirement. It is important to save or invest enough money during your working years so that you can pay for your plans for the future. This is called personal finance.

Personal finance is when you buy things to use. For example, a credit card is a financial product. You can also buy the insurance and a house or invest in something else. Banking is also part of personal finance because you have a bank account and may use PayPal or Venmo to pay for things.

Corporate finance

Corporate finance means the work related to running a company. There is usually someone in charge of it and they may need to decide if the company needs more money.

For example, a big company might not have enough money and need to borrow or issue shares to get more money. Banks may help them make this decision and market the securities.

Startups might get money from angel investors. This is when they give a company some money and own some of the company. Startups might also get money from venture capitalists, which is when they give a lot of their own money to the company instead of just some.

If a startup does well and wants to grow more, then it can do an IPO (when it makes shares with its stock exchange). The different ways startups can get more cash for their business are called corporate finance.

Public finance

Public finance is about how governments pay for things. Taxing, spending, budgeting, and debt-issuance are all part of public finance. The federal government helps people with money. They have rules for how to spend it.

They can give it out, but they have to come back for more later. And the government borrows money from other people or banks or insurance companies so that they can spend it now.

Government bodies often have to do things with money. They take care of people and also make sure the economy is stable so that people can save their money.

FIVE PRINCIPLES OF FINANCIAL TRANSACTIONS MANAGEMENT

There are five main rules to managing your research money. Research Accounting Services has created policies and procedures to help people follow these rules. The 5 rules are: Consistency, Timeliness, Justification, Documentation and Certification.

CONSISTENCY

Transactions should be done in a normal way. For example, there are policies and processes that will help you with transactions of the same type.

TIMELINESS

Transactions must be handled in a reasonable amount of time. This is consistent with the time frames that are outlined for other institutions, like the federal government and Drexel University.

JUSTIFICATION

There is a reason for the transaction. It is in order to meet all of the guidelines that are set by federal agencies, a private sponsor, and Drexel University.

DOCUMENTATION

You need to have enough documents that support the transaction. These must be kept organized and complete enough to stand up to an audit.

CERTIFICATION

All transactions need to be approved and have the right signatures.


FAQ’s


What is the best definition of finance?

Finance is the management of money. You can do things with it like invest, borrow, and lend. You also need to think about how much money you have and how you might spend it in the future.

Why is finance so important?

Finance is important. It helps make new businesses and it lets people who have companies be able to do more things, like hire people from the area, and they'll also pay taxes. That's good for the government too.

What is the purpose of finance?

The purpose of finance is to help people save money and to manage and raise it. When you study finance, you should learn about the different types of finance. One type is called investing. It can be tough but research how to do it well.

What are the 5 principles of finance?

The five principles of finance are consistency, timeliness, justification, documentation, and certification.

What are the sources of finance?

Some of the ways that people get money for their business are by selling some of their company, borrowing from a bank, or taking out a loan. These things are used in different situations.



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