Finance (from Lat. Financia - cash, income) - a set of economic relations arising in the process of formation, distribution and use of centralized and decentralized funds of funds.


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Finance differs from money both in content and in the functions performed

We can say that finance is a complex economic category. Finances are necessarily accompanied by the movement (cash or non-cash) of funds. Whether we are talking about the distribution of profits and the formation of on-farm funds at enterprises, or about the transfer of tax payments to the state budget revenues, or about the contribution of funds to off-budget or charitable foundations - in all these and similar financial transactions, cash flows occur.

Cash flow alone does not reveal the nature of finance. To comprehend it, it is necessary to identify those general properties that characterize the internal nature of all financial phenomena. A bestseller Money master the game Ebook can be reccommended for further studies.

Based on this, we can state the relationship between finance and such economic categories as money, price, wages, credit, etc. However, it would be wrong to summarize the category of finance for the categories named just above. Finance differs significantly from other categories operating at the cost allocation stage.

Finance is characterized primarily by a monetary nature (this is the first sign of finance). Money is a prerequisite for the existence of finance. The real movement of funds occurs at the second and third stages of the reproduction process - in distribution and exchange.

The area of ​​origin and functioning of finance is the second stage of the reproduction process, at which the value of the social product is distributed according to its intended purpose and business entities. Therefore, the second important feature of finance as an economic category is the distributive nature of financial relations.

The interrelation of economic categories operating at the stage of cost distribution necessitates their complex use in business practice. In this case, both the very specifics of the functioning of finance, prices, wages, credit, and their scope should be taken into account. If this is not the case, the functioning of the categories in the value allocation process will not have a positive effect on production results. Another useful textbook is Managers handbook PDF.

Consider the relationship and at the same time the delineation of finance and other economic categories.

Money and finance

In the everyday sense, finances are often combined with money - this is not entirely true. Money and finance are inseparable categories, since finance is characterized by the movement of funds, but it is not money itself.

Finance and price

First of all, let's define the concept of price. Price is an economic instrument through which the value of a product is expressed in monetary terms and becomes an object of distribution. It is it that predetermines the specific amount of funds flowing into that other sector of the economy, that other owner. Price, and only it, acts as the initial basis on which the entire further distribution process takes place, since it is in it that the various elements of the value of the social product find expression.

As a quantitative measure of value created in production, its monetary expression, price predetermines the proportions of future value distribution, carried out in accordance with the factors of production.

But being the initial basis of value distribution, predetermining its primary structure, the price, nevertheless, can not provide either distribution according to the subjects of property, or the functional separation of different parts of value. An exchange must necessarily take place and a value distribution take place so that all parts of the value (c, v, m) receive a specific embodiment in certain quantitative proportions. For instance, the Business management books pdf free download is currently for free at the store.

Thus, the process of formation of various parts of value, as it were, splits into two stages: at the first stage, the advanced value is transferred and income is created, which is really the moment of production itself; in the second, the compensation fund and primary incomes are allocated in their various specific forms, which constitutes the content of the next stage of the reproduction process - the stage of value distribution, when a certain quantitative proportion is given to each part of the value. But the second stage in the formation of the elements of value is no longer carried out with the help of price (although potentially all parts of value are embedded in it), but with the help of other economic categories.

So, speaking directly about the interaction of price and finance, it should be noted that the functioning of price and finance in the process of value distribution is carried out in close interconnection: prices are the basis of the financial method of distributing value, and finance, based on the proportions of distribution that have developed under the influence of prices, are a tool.