What Are Currency Funds?

Money refers to assets owned by an enterprise in the form of money, including cash, bank deposits, and other monetary funds. Monetary funds are the starting point and ending point of the corporate capital movement, and a prerequisite for the production and operation of enterprises. With the progress of the reproduction process, frequent currency revenue and expenditure will be formed. Monetary capital income is formed when an enterprise obtains cash investment, accepts cash donations, obtains bank borrowings, and obtains payment for goods after selling products, etc .; it purchases materials, pays wages to pay other expenses, returns loans, and pays taxes, etc., and forms currency. expenditure. In daily economic transactions, there is often a time gap between the receivable and payable of monetary funds and the actual payment, which forms the current settlement accounting. ^[1]

Money funds

We will learn from the following three aspects

1. Cash refers to the business

Inventory of cash and cash: Including inventory of cash, bank deposits and various securities. 1. Inventory cash inventory: generally used

Monetary funds are the most liquid and have the highest risk control

In the balance sheet, "monetary funds" is listed as the first item, because this is an asset that can be used to pay at any time, anyone will immediately accept it without any discount, and it has the highest liquidity. Monetary funds include cash on hand, various bank deposits, and funds in transit, etc., and are listed in monetary amounts.

Objectives of internal control of monetary funds:

The goal of internal control is the fundamental starting point for the establishment of a sound internal control system. The internal control of monetary funds should achieve the following goals: First, the security of monetary funds. Through good internal control, ensure the unit's inventory cash security and prevent theft, fraud and misappropriation. Second, the integrity of monetary funds. Check whether the monetary funds received by the unit have been fully accounted to prevent illegal acts such as privately setting up a "small treasury" that encroach on the unit's income. Third, the legitimacy of monetary funds. Check whether the acquisition and use of monetary funds are in compliance with national laws and regulations and whether the formalities are complete. Fourth, the effectiveness of monetary funds. Reasonably arrange monetary funds to make the most of their economic benefits.

Monetary funds are an indispensable resource for the survival and development of an enterprise, the basic premise of an enterprise's production and operation activities, and the resource most prone to problems. For the group company, the risk management of monetary funds is not only reflected in how to prevent the loss, shortage, theft and misappropriation of resources, but also how to optimize the allocation of resources to take advantage of resources. If the fund management system is decentralized and the monitoring is unbalanced, the parent company cannot grasp the capital status of the subsidiary company and cannot control the fund operation behavior of the subordinate member units, it will not be able to support the group's most important business activities at the group level in supporting fund allocation. As a result of risks such as improper investment, out-of-funding control, and misalignment of internal financial financing, the problems of a subsidiary may drag the parent company into endless debt and guarantee disputes.

From the experience of large domestic and foreign group companies, their fund management is generally highly centralized. Through the centralized management of funds, an "internal capital market" can be formed within the group. Through this "internal capital market" operation, management can obtain clearer data to identify those business activities that have contributed the most to the group, and arrange the order of financing according to the superiority of the project, thereby guiding the group's capital allocation. Solve the problem of scattered funds and low efficiency, and give play to the Group's advantages in resource allocation. ^[4]