Finance theoretical questions

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Definition of finance :

The word finance has originated from the Latin word 'finis' whose lexicographical meaning is collection of money.So from the viewpoint of organization we can say that finance is the money or other liquid resources ,which raises or provides funds or capital.So finance is the act of providing the means of payment.But this is a harrow concept of finance.At present this concept has come to an end and has originated a modern concept.As per modern concept,finance means collection of money,process of collection,use of land,planning and control,everything related to fund.
According to E.W.Walker,"Activities of a business concern to financial planning,co-ordination,control and their application is called finance".

Classification of finance :

Finance may mainly be classified into two broad categories.
1.Private finance and 2.Public finance
1.Private finance : It is subdivided into three categories ,such as- a)personal finance b)business finance c)finance of non-profit organizations.
2.Public finance : It embraces the finance of  states,nations,municipalities.It is concerned with the financial requirements,receipts and disbursements of different governmental bodies.

Business finance :

Business finance may of three types.
1.Short term finance : Short term finance is also known as working capital.It is required to finance the current assets.It is needed for meeting temporary requirements of the organization.
2.Intermediate term finance : Intermediate term finance is thought of as that which runs over one year but not over ten years.It is taken by a businessman when short term finance is incapable of meeting the requirements and long term loans are too costly.

3.Long term finance : Long term finance refers to the capital that is needed for financing fixed assets or long lived assets,investment in fixed assets such as land ,building,machinery etc. is financed out of long term capital funds.

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