Types of Banks in India

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Banking has been originated in the affluent cities of Italy in the 14th century and was introduced in India in
the late 18th century. Banks like the Bank of Hindustan, The General Bank of India, The State Bank of
India, were the first banks which were set up in the country in the year 1770, 1786 and 1806 respectively.

The banking sector has witnessed a rapid growth in India in the past few decades and has come a long
way. The Reserve Bank of India functions as the Central bank and has a control over all the nationalized
banks of India.

The various types of Banks in India can be categorized in the following categories:
Savings banks

The savings banks are especially for those who belong to the low income groups or those who are
salaried. The savings banks function with the intention to help people culminate the saving habits, which
is especially for those who belong to the lower income groups or those who are salaried. The post office
is also in a way a saving bank, where people can open recurring accounts to save money.

Commercial Banks

The main function of these types of banks is to give financial services to the entrepreneurs and
businesses. It gives financial to the businessmen like providing them with debit cards, banks accounts,
short term deposits, etc. with the money deposited by people in such banks. The commercial banks also
lend money to these businessmen in the form of secured loans, unsecured loans, credit cards, overdrafts
and mortgage loans. It got the tag of a nationalized bank in the year 1969 and hence the various policies
regarding the loans, rates of interest, etc are controlled by the Reserve Banks of India.

The further classifications of the commercial banks are private sector banks, public sector banks, regional
banks and foreign banks.
Private Sector Banks
These banks are owned and operated by the private institutes and are controlled by the market forces.
The greater share of the private sector banks is held by private players and not the government. Some
good example of Private sector banks are Kotak Mahindra bank, ICICI Bank, HDFC Bank, Axis Bank, etc.
Public Sector Banks
These type of banks are operated by the Government. Their main focus is to serve the people rather earn
profits. State bank of India, Punjab National bank, State bank of Patiala, Allahabad Bank, etc. are the
some of the important examples of Public sector bank.
Regional Banks
The regional banks are those banks which can only operate in the areas specified by government of
India. These banks are owned by sponsor bank and Sate Government. They came into operation with the
objective of providing credit to the agricultural and rural regions and were brought into effect in 1975 by
the Reserve Bank of India (RRB) Act . Prathama Bank located in Moradabad, UP is one such example of
regional rural bank.

Co-operative Banks

The co-operative sector is very much useful for rural people and provide finance to farmers, salaried
people, small scale industries, etc. These banks are controlled, owned, managed and operated by the
cooperative societies and came into existence under Cooperative Societies Act in 1912.

The co-operative banking sector is divided into the following categories.
1. State co-operative Banks
2. Central co-operative banks
3. Primary Agriculture Credit Societies

Investment Banks

Investment banks are financial institutions which provide financial assistance to its customers. Their
clients include government organizations, individuals or businesses. When there is an acquisition or
merger, these customers are provided with necessary support like foreign exchange, foreign trading,
marketing, sale of equities, fixed income instruments, etc. These banks, apart from capital raising, also
render valuable financial advise to their various kinds of businesses and customers. Banks like the Bank
of America, Deutsche Bank, Citi Bank, etc. are some examples of Investment Bank.
Specialized Banks
The main function of specialized banks is to provide unique services to their customers. Some example of
specialized banks are foreign exchange banks, industrial banks, development banks, export import
banks, etc. Specialized banks also provide financial support to various kinds of projects and businesses
who have to export or import their services or goods.

Central Bank
It is called the banker's bank in our country. The Reserve Bank of India is the central Bank that is fully
owned by the Government. It is governed by a central board (headed by a Governor) appointed by t he
Central Government. It issues guidelines for the functioning of all banks operating within the country. The
monetary control is the primary function of a central bank and is also considered as the lender to various
commercial banks.
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A loan is an agreement between us and the bank to repay a fixed amount of money over a duration
(usually years) as equated monthly installments.

An overdraft is similar to a loan but is slightly different. In case of overdraft you can withdraw cash to
a certain limit more than your bank account balance. you can repay this amount within the next few
days or weeks or months. for as long as you have used the overdraft amount, the bank would
charge an interest. the moment you repay the whole amount you would be eligible to re-use the
entire overdraft amount again.
Field Code Changed
Capital Market is one of the significant aspect of every financial market. Hence it is necessary to study its correct
meaning. Broadly speaking the capital market is a market for financial assets which have a long or indefinite maturity.
Unlike money market instruments the capital market intruments become mature for the period above one year. It is
an institutional arrangement to borrow and lend money for a longer period of time. It consists of financial institutions
like IDBI, ICICI, UTI, LIC, etc. These institutions play the role of lenders in the capital market. Business units and
corporate are the borrowers in the capital market. Capital market involves various instruments which can be used for
financial transactions. Capital market provides long term debt and equity finance for the government and the
corporate sector. Capital market can be classified into primary and secondary markets. The primary market is a
market for new shares, where as in the secondary market the existing securities are traded. Capital market
institutions provide rupee loans, foreign exchange loans, consultancy services and underwriting.
Capital Market is one of the significant aspect of every financial market. Hence it is necessary to study its correct
meaning. Broadly speaking the capital market is a market for financial assets which have a long or indefinite maturity.
Unlike money market instruments the capital market intruments become mature for the period above one year. It is
an institutional arrangement to borrow and lend money for a longer period of time. It consists of financial institutions
like IDBI, ICICI, UTI, LIC, etc. These institutions play the role of lenders in the capital market. Business units and
corporate are the borrowers in the capital market. Capital market involves various instruments which can be used for
financial transactions. Capital market provides long term debt and equity finance for the government and the
corporate sector. Capital market can be classified into primary and secondary markets. The primary market is a
market for new shares, where as in the secondary market the existing securities are traded. Capital market
institutions provide rupee loans, foreign exchange loans, consultancy services and
underwriting. In finance, the money market is the global financial market for short-term borrowing and
lending. It provides short-term liquidity funding for the global financial system. The money market is
where short-term obligations such as Treasury bills, commercial paper and bankers' acceptances
are bought and sold.
a place where shares are bought and sold, i.e. a stock exchange
Example: stock market price or price on the stock market


Read more: http://www.businessdictionary.com/definition/stock-market.html#ixzz3E9ZhMAnd
A stock market is the market that people use to trade (= buy and sell) shares, which are like small
pieces of thecompany that a person can own. The value of the share depends on how many people
want to buy it and how many people are selling it.
If many people want to buy a stock, the price will go up. If there are more sellers than buyers, the
price will go down.
People usually trade shares in stocks through a broker. A broker or stockbroker is a person who
buys or sell stocks for their customers on the stock market. A broker can also help customers make
good choices in stocks. Most brokers have recommendations for most of the stocks

The key distinguishing feature between the money and capital markets is the maturity period of the
securities traded in them. The money market refers to all institutions and procedures that provide for
transactions in short-term debt instruments generally issued by borrowers with very high credit
ratings. By financial convention, short-term means maturity periods of one year or less. Notice that
equity instruments, either common or preferred, are not traded in the money market. The major
instruments issued and traded are U.S. Treasury bills, various federal agency securities, bankers"
acceptances, negotiable certificates of deposit, and commercial paper. Keep in mind that the money
market is an intangible market. You do not walk into a building on Wall Street that has the words
"Money Market" etched in stone over its arches. Rather, the money market is primarily a telephone
and computer market. The capital market refers to all institutions and procedures that provide for
transactions in long-term financial instruments. Long-term here means having maturity periods that
extend beyond one year. In the broad sense, this encompasses term loans and financial leases,
corporate equities, and bonds. The funds that comprise the firm's capital structure are raised in the
capital market. Important elements of the capital market are the organized security exchanges and
the over-the-counter markets. to more information about the money market versus the capital
market


Sajina answered 2 months ago
sensex is sensitivity market. sensex is comes under Bombay Stock Exchange. In sensex there are
top 30 actively trading companies which are having 50% market shares in BSE.
nifty is comes under National Stock Exchange. It includes 50 top traded companies from 24
different sectors.both nifty and sensex shows share value of a particular company
The Sensex is an "index". What is an index? An index is basically an indicator. It gives you a general idea
about whether most of the stocks have gone up or most of the stocks have gone down.
The Sensex is an indicator of all the major companies of the BSE.
The Nifty is an indicator of all the major companies of the NSE.
If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE
have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on
the BSE have gone down.
The 'BSE Sensex' or 'Bombay Stock Exchange' is value-weighted index composed of 30 stocks and was
started in January 1, 1986. The Sensex is regarded as the pulse of the domestic stock markets in India. It
consists of the 30 largest and most actively traded stocks, representative of various sectors, on the
Bombay Stock Exchange. These companies account for around fifty per cent of the market capitalization
of the BSE.

The Standard & Poor's CRISIL NSE Index 50 or S&P CNX Nifty nicknamed Nifty 50 or simply Nifty (NSE:
^NSEI), is the leading index for large companies on the National Stock Exchange of India. The Nifty is a
well diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of
purposes such as benchmarking fund portfolios, index based derivatives and index funds. Nifty is owned
and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and
CRISIL. IISL is India's first specialized company focused upon the index as a core product. IISL has a
marketing and licensing agreement with Standard & Poor's.

Nifty--------acc ltd, axix bank ,hcl , icici ,hdfc ,tcs , tata steel . tech Mahindra,wipro,Punjab national
bank,wipro

he key distinguishing feature between the money and capital markets is the maturity period of the
securities traded in them. The money market refers to all institutions and procedures that provide for
transactions in short-term debt instruments generally issued by borrowers with very high credit
ratings. By financial convention, short-term means maturity periods of one year or less. Notice that
equity instruments, either common or preferred, are not traded in the money market. The major
instruments issued and traded are U.S. Treasury bills, various federal agency securities, bankers"
acceptances, negotiable certificates of deposit, and commercial paper. Keep in mind that the money
market is an intangible market. You do not walk into a building on Wall Street that has the words
"Money Market" etched in stone over its arches. Rather, the money market is primarily a telephone
and computer market. The capital market refers to all institutions and procedures that provide for
transactions in long-term financial instruments. Long-term here means having maturity periods that
extend beyond one year. In the broad sense, this encompasses term loans and financial leases,
corporate equities, and bonds. The funds that comprise the firm's capital structure are raised in the
capital market. Important elements of the capital market are the organized security exchanges and
the over-the-counter markets. to more information about the money market versus the capital
market
please visits this link
http://thefutureofmoney.blogspot.com/2009/09/money-market-versus-capital-market.html
money that has been borrowed for a period of ten years:Venture capitalists provide equity and
other types of long term funds tounlisted companies.
money that has been borrowed for a short time, usually less than five years:Borrowers are
often businessmen seeking to raise short-term funds toclinch deals.
capital market is a market where u borrow and lend a big lump sum money or equity or stock for a long
period
A capital market is a market for securities (debt or equity), where business enterprises (companies) and
governments can raise long-term funds. It is defined as a market in which money is provided for periods
longer than a year.

Capital markets may be classified as primary markets and secondary markets.

In primary markets, new stock or bond issues are sold to investors through IPO / FPO

In the secondary markets, existing securities are sold and bought among investors or traders, usually on
a securities exchange, over-the-counter.
A stock market is a place where buyers and sellers trade company stock for a set price. In the financial
world, stock simply means a supply of money a company has raised from individuals or other
organizations. If you buy stock, then you own a part of a company. This part is called a share. People
who own stock are referred to as "shareholders" or "stockholders."

Shareholders hope the companies they invest in go on to earn money, because they will then receive a
share of the profits. If the company they buy stock in loses money, however, then the stockholders won't
even regain the money they invested. Shareholders usually have voting rights, typically one vote for every
share they own. Many companies have yearly meetings where the shareholders can vote on company
issues. Stockholders also receive annual or quarterly reports that let them know how the company is
doing financially.

When a corporation wants to sell shares of its company, it lists its stock on an exchange. The New York
Stock Exchange (NYSE) and the National Association of Securities Dealers (NASDAQ) are commonly
used stock exchanges in the United States. These exchanges are set up to make it faster and easier for
people to buy and sell company stock.

When individuals want to buy or sell stocks, they can simply call a stock broker, which is a firm authorized
to trade at stock exchanges. The stock broker relays the trade message to the floor of the correct
exchange, and a representative of the company then completes the trade request. A stock broker
receives a commission for providing this trading service. However, it is becoming increasingly popular for
people to use online trading sites instead of stock brokers.

If an individual believes the stock market is going to go down, he or she is referred to as bearish. These
bearish investors buy stock very cautiously. People are called bullish when they believe the stock
market will go up. Bullish investors tend to put more money into the stock market. Likewise, if the prices of
stocks as a group tend to rise, the stock market is called a "bull market." If stock prices as a group tend to
fall, however, the stock market is referred to as a "bear market."

The first public stock market is reported to be the Amsterdam Stock Exchange. This Dutch exchange was
founded in the early 17th century and started the trend of buying and selling shares of company stock.
There are now stock markets in a majority of developed countries. The largest stock markets are in the
United States, the United Kingdom, Canada, Germany, China and Japan.
stock exchange
noun
1. a market in which securities are bought and sold.
"the company was floated on the stock exchange"
o the level of prices in a particular stock exchange.
noun: Stock Exchange; noun: the Stock Exchange
"the biggest rise in the stock exchange in American history"

nstruments that are traded on Money Market:
Bankers' acceptance: A draft issued by a bank that will be accepted for payment, effectively the same as a
cashier's check.
Certificate of deposit: A time deposit at a bank with a specific maturity date; large-denomination
certificates of deposits can be sold before maturity.
Repurchase agreements: Short-term loans-normally for less than two weeks and frequently for one day-
arranged by selling securities to an investor with an agreement to repurchase them at a fixed price on a fixed
date.
Commercial paper : Unsecured promissory notes with a fixed maturity of one to 270 days; usually sold at a
discount from face value.
Eurodollar deposit: Deposits made in U.S. dollars at a bank or bank branch located outside the United
States.
Treasury bills: Short-term debt obligations of a national government that are issued to mature in three to
twelve months. For the U.S., see Treasury bills.
Money funds: Pooled short maturity, high quality investments which buy money market securities on
behalf of retail or institutional investors.
Foreign Exchange Swaps: Exchanging a set of currencies in spot date and the reversal of the exchange of
currencies at a predetermined time in the future.


What is capital market?
Basically the capital market is a type of financial market, it includes the stocks and bonds market as
well. But in general the capital market is the market for securities where either companies or the
government can raise long term funds

What is the money market?
Basically the money market is the global financial market for short-term borrowing and lending and
provides short term liquid funding for the global financial system. The average amount of time that
companies borrow money in a money market is about thirteen months or lower

Distinction between capital market and money
market?
The key distinguishing feature between the money and capital markets is the maturity period of
the securities traded in them. The money market refers to all institutions and procedures that
provide for transactions in short-term debt instruments generally issued by borrowers with very
high credit ratings. By financial rule, short-term means maturity periods of one year or less.
While the capital market refers to all institutions and procedures that provide for transactions in
long-term financial instruments. Long-term here means having maturity periods of more than
one year

A market that gives companies a way to raise needed capital and gives investors an opportunity for gain by allowing those
companies' stock shares to be traded. Also called stock market.

Read more: http://www.businessdictionary.com/definition/equity-market.html#ixzz3E9ogjtxk

You are here: Home > Economics help blog > Foreign Currency Reserves
Foreign Currency Reserves
by Tejvan Pettinger on October 27, 2008 in currency
Readers Question: What is the main purpose of foreign reserve? Who decides what amount
to be kept as reserve and how this reserve is financed? Could be please explain in detail?
Definition: Foreign Currency Reserves (Forex Reserves). This is the amount of foreign
currency reserves that are held by the Central Bank of a country.
In general use, foreign currency reserves also include gold and IMF reserves. Also, people
may take into account liquid assets that can easily be converted into foreign currency.
For example, Japan has just under $1,000 trillion dollars of foreign currency reserves,
mostly in the form of dollars, Euros and Gold.
The most common currency for holding foreign currency is the dollar with 64%, the Euro is
increasing its share and now accounts for 26% (see: Will Euro replace Dollar as global
reserve currency)
Reasons for Holding Foreign Currency Reserves
Influence the exchange Rate. With large foreign exchange reserves, a country can target
a certain exchange rate. For example, suppose China wanted to increase the value of its
currency the Yuan. China could sell its dollar reserves to buy Yuan on the foreign exchange
markets. The increased demand for Yuan would appreciate the Yuan. Actually, the Chinese
have been trying to keep the Yuan undervalued by selling Yuan and buying Dollars. This is
why China has so many Dollar reserves. In a fixed exchange rate, foreign currency
reserves can play an important role in trying to keep a target exchange rate.
Act as a Guarantor for Liabilities such as External Debt. If a country holds substantial
foreign debt, holding foreign currency reserves can help to give more confidence in the
countrys ability to pay. If countries have dwindling foreign currency reserves, there is likely
to be a deterioration in a countrys credit worthiness.
Who Decides Foreign Currency Reserves?
1. The amount of foreign currency reserves will be decided by the Central Bank / Government
depending on current exchange rate / monetary policy?
2. For example, in the Bretton Woods system, countries tried to maintain a certain level of foreign
currencies to be able to protect the value of a currency. In a floating exchange rate there is less
need to hold foreign currency for protecting against speculative attacks.
3. Often an increase in foreign currency reserves may simply reflect a large current account surplus
and a desire to prevent the currency appreciating too much. By buying foreign currency the
domestic currency is kept lower than it would otherwise have done.
Problems of Foreign Currency Reserves
1. Foreign Currency Reserves are rarely sufficient to target a certain exchange rate. If speculators sell
heavily, then a currency will fall despite the best efforts of a Central bank. e.g. the UK lost billions
trying to protect the value of Pound when it was in the Exchange Rate Mechanism in 1992.
Eventually, the UK authorities had to admit defeat and devalue the pound.
2. Inflation Erodes Value. The problem with holding foreign currency reserves is that they can lose
their value. Inflation erodes the value of currencies not fixed against gold (fiat exchange rates).
Therefore, a Central Bank will need to keep buying foreign reserves to maintain the same
purchasing power in markets. Also, there may have been many better (higher yielding uses of the
capital).
3. Lose Money on Currency Changes. In theory a Central bank can make money through the
appreciation of other currencies it holds. However, many Central Banks have been losing money
through the long term decline in the value of the dollar. This particularly applies to China who have
over $1900 billion of foreign reserves, mostly held in dollars.

Deposits of a foreign currency held by a central bank. Holding the currencies of other
countries as assets allow governments to keep their
currencies stable and reduce the effect of economic shocks. The use of foreign exchange
reserves became popular after the decline of the gold standard.

Read
more: http://www.investorwords.com/6522/foreign_exchange_reserve.html#ixzz3E9rCCl9a
Foreign exchange reserves are stores of international currency held by the central banks of nations
around the world. The primary purpose of the foreign exchange reserve is for the international
settlement of debts and payments between governments.


Foreign exchange reserves have broken the link to the gold standard and are now predominately
associated with foreign currency and bonds, particularly U.S. dollars and Treasuries. Foreign
exchange reserve policy affects exchange rates, international trade and inflation.
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What Is the Foreign Exchange Reserve?
RBI Market Intervention Techniques
1. Official International Payments
o Foreign exchange reserves are used to make international payments between countries.
These payments are associated with military spending, government aid and loans to build
infrastructure. Countries remain committed to building strong foreign exchange reserves in
order to stay in good standing with allies and to help balance the world economy. National
debt defaults devalue currency and are disastrous, commercially, because governments and
private entities will be reluctant to transact business with countries that cannot honor
payments.
Gold Standard and the U.S. Dollar
o
Gold and silver were once the only accepted medium for settling international payments
between nations, prior to the 1944 Bretton Woods Agreements. The Bretton Woods system
and International Monetary Fund emerged to establish commercial protocol between
industrial nations, many of which had been devastated by two world wars. The United
States was untouched by war at home and became the world's supreme power to make loans
to Western Europe and Japan.
International exchange rates were pegged to the U.S. dollar, which was in turn backed and
convertible into gold at a set rate. Both mediums would function as foreign exchange
reserves to make payments. The system collapsed in 1971 when the U.S. abandoned
convertibility of gold into dollars. The U.S. dollar is still the most dominant currency for
foreign exchange reserves, but it is no longer backed by gold.
Central banks have always used foreign exchange reserves to influence exchange rates and,
consequently, international trade and inflation.
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Exchange Rates
o Central banks trade domestic notes against foreign currency collectively to affect exchange
rate movements. International central banks trade, sell or simply run the printing presses to
create domestic currency, which is then used to buy foreign exchange. Buying foreign
currency by creating money devalues the home currency against that particular medium.
Conversely, foreign central banks strengthen the home currency by releasing foreign
currency back into the marketplace out of the reserves in exchange for the domestic
currency, which is then taken out of circulation.
The United States Federal Reserve Bank of New York manages the U.S. foreign exchange
reserves on behalf of the U.S. Treasury.
International Trade
o Exchange rates affect international trade by influencing the prices of goods relative to each
other by nationality. Exports sell for low prices overseas when the domestic currency has
been devalued against competing foreign exchange. Meanwhile, imports become more
expensive when the home currency is weak. Tourists and business travelers visit nations
with weaker currencies in order to exploit additional buying power.
Central banks manipulate foreign exchange reserves for competitive advantages. Export
economies add to foreign exchange reserves in order to devalue the home currency and sell
cheap goods overseas. China leads the world in foreign exchange reserves and carries over
$2 trillion in U.S. dollars, which effectively devalues the yuan and drives China's export
economy.
Inflation and Loss
o Fiat currency, which identifies money that is not backed by gold, is always susceptible to
long-term devaluation, or inflation. Inflation identifies the loss of purchasing power that
occurs over time. Central banks pressure the value of domestic currency through printing
and creating money in order to buy foreign exchange.
Nations that hold large amounts of foreign currency incur losses in purchasing power as the
exchange values of that currency decrease. Foreign exchange reserves earn little in terms of
interest. This means that interest income will not overcome the losses realized from holding
depreciating currency. Treasury officials decide whether foreign exchange reserves would
have been of better service to the home nation as domestic investments.

Liquid assets are assets that can be converted quickly and easily into cash. They are generally
regarded in the same light as cash because their prices are relatively stable when they are sold on
the open market. Liquid assets include most stocks, money market instruments and government
bonds.
An asset that can be converted into cash in a short time, with little or
no loss in value.
Liquid assets include items such as accounts receivable, demand and time
deposits, gilt edged securities. In some countries, precious
metals (usually gold and silver) are also considered liquid assets.
Also called quick asset.


Current assets are assets that are likely to be converted into cash within the operating period--that
is the assets of the company that are most liquid. These mainly consist of the following:
Cash and Marketable Securities
Accounts Receivable
Inventories
Other Current Assets

Non current assets are assets that are unlikely to be converted into cash, but rather items that the
company will keep over a long period of time. Examples of theses are as followed:

Property Plant and Equipment
Intangible Assets
Other non current assets

1. cash and other assets that are expected to be converted to cash within a year.

An asset such as receivables, inventory, work in process, or cash,
that is constantly flowing in and out of an organization in the
normal course of its business, as cash is converted
into goods and then back into cash. In accounting, any asset
expected to last or be in use for less than one year is considered
a current asset. Also called circulating asset.

cash, which includes checking account balances, currency, and undeposited checks from customers
(that are not postdated)

petty cash

cash equivalents, such as government securities which were purchased within 90 days of their
maturity

temporary investments, such as certificates of deposit maturing within one year of the balance sheet
date, and certain other investments

accounts receivable, or trade receivables, after deducting an allowance for doubtful accounts

notes receivable maturing within one year of the balance sheet date

other receivables, such as income tax refunds, cash advances to employees, and insurance claims

inventory of raw materials, work-in-process, finished goods, manufacturing and packaging supplies

office supplies

prepaid expenses, such as insurance premiums which have not yet expired

advance payments on future purchases

time deposit
noun
plural noun: time deposits
1. a deposit in a bank account that cannot be withdrawn before a set date or for which
notice of withdrawal is required

Firstly here's the definition of money: any commodity or token that is generally acceptable as a means of
payment. Money can be either currency (cash) or bank/building society deposits. Money is backed up by
something. Fiat money is backed by the government whilst commodity money is backed by some
commodity, typically gold.

Near money is anything that can be easily liquidated (turned into) into money. Examples would be:
Savings accounts, Money market funds, Bank time deposits (Certificates of deposit), Government
treasury securities (such as T-bills), Bonds near their redemption date, Foreign currencies, especially
widely traded ones such as the US dollar, euro or yen. All these examples cannot be used as a means of
payment. So you cannot pay for a good in a shop with a foreign currency or a bond.


Accounts payable are amounts a company owes because it purchased goods or services
on credit from a supplier or vendor. Accounts receivable are amounts a company has a right to
collect because it sold goods or services on credit to a customer. Accounts payable are liabilities.
Accounts receivable are assets.
note receivable
1. A note receivable is a formal, written promise to receive a specific
amount of cash from another party on one or more future dates.



Written promises to receive stated sums of money at future dates, classified as current (if due within 12 months) or non-
current (if due after 12 months) of the balance sheet date.

Read more: http://www.businessdictionary.com/definition/notes-receivable.html#ixzz3EA1kGAbI
petty cash
noun
1. an accessible store of money kept by an organization for expenditure on small items.

Petty cash is a small amount of cash on hand that is used for paying small amounts owed, rather
than writing a check. Petty cash is also referred to as a petty cash fund. The person responsible for
the petty cash is known as the petty cash custodian.

Some examples for using petty cash include the following: paying the postal car rier the 17 cents due
on a letter being delivered, reimbursing an employee $9 for supplies purchased, or paying $14 for
bakery goods delivered for a company's early morning meeting.

The amount in a petty cash fund will vary by organization. For some, $50 is adequate. For others,
the amount in the petty cash fund will need to be $200.

When the cash in the petty cash fund is low, the petty cash custodian requests a check to be cashed
in order to replenish the cash that has been paid out.



certificate of deposit--------- cds
noun
1. a certificate issued by a bank to a person depositing money for a specified length of
time at a specified rate of interest.

ertificate of Deposit Meaning:
In deposit terminology, the term Certificate of Deposit or CD refers to money market instruments of
relatively short duration or savings accounts that pay a fixed rate of interest until a given maturity date.
Also, funds placed in a Certificate of Deposit usually cannot be withdrawn prior to maturity or they can
perhaps only be withdrawn with advanced notice and/or by having a penalty assessed.

Certificate of Deposit Example:
For example, a Certificate of Deposit will often be used by individuals, businesses and financial
institutions around the world as a means of storing their liquid funds for a fixed period of time for future
use. In the retail market, a Certificate of Deposit is a relatively safe investment when provided by insured
financial institutions such as banks, savings and loan corporations and credit unions that are usually
regulated within the country in which they operate. Also, Certificates of Deposit are typically known as
term deposits in countries like Australia, Canada and New Zealand, as time deposits in the United States,
as bonds in Great Britain, and as fixed deposits in some other countries like India.


A certificate of Deposit is a promissory note that authenticates a deposit you have made with the bank to
leave your funds with them within a stipulated period of time upon agreement of a certain amount of
interest.Its what you get in return for opening a fixed deposit account.
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b2fnow answered 4 years ago
Here's a good reference for finance terms and definitions

http://www.investopedia.com/terms/c/cert...

What Does Certificate Of Deposit - CD Mean?
A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed
interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and
are insured by the FDIC. The term of a CD generally ranges from one month to five years.

Investopedia explains Certificate Of Deposit - CD
A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders
from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will
often incur a penalty.

For example, let's say that you purchase a $10,000 CD with an interest rate of 5% compounded annually
and a term of one year. At year's end, the CD will have grown to $10,500 ($10,000 * 1.05).

CDs of less than $100,000 are called "small CDs"; CDs for more than $100,000 are called "large CDs" or
"jumbo CDs". Almost all large CDs, as well as some small CDs, are negotiable.








1. a short-dated UK or US government security, yielding no interest but issued at a
discount on its redemption price.


Treasury bill
noun
plural noun: Treasury bills
1. a short-dated UK or US government security, yielding no interest but issued at a
discount on its redemption price.

Would you like to put money aside and earn significant interest returns in only a few weeks or months?
You might consider buying treasury bills, a popular and accessible form of investment. You don't have to
be rich to afford them, and they are simple and virtually risk-free.
Banking Pictures
Treasury bills, also known as "T-bills," are a security issued by the U.S. government. When you buy one,
you are essentially lending money to the government. Here, the term security means any medium used
for investment, such as bills, stocks or bonds.
Treasury bills have a face value of a certain amount, which is what they are actually worth. But they are
sold for less. For example, a bill may be worth $10,000, but you would buy it for $9,600. Every bill has a
specified maturity date,which is when you receive money back. The government then pays you the full
price of the bill -- in this case $10,000 -- and you earn $400 from your investment. The amount that you
earn is considered interest, or your payment for the loan of your money. The difference between the value
of the bill and the amount you pay for it is called the discount rate, and is set as a percentage. In the
example above, the discount rate is 4 percent, because $400 is 4 percent of $10,000.
Treasury bills are one of the safest forms of investment in the world because they are backed by the U.S.
government. They are considered risk-free. They are also used by many other governments throughout
the world.

http://money.howstuffworks.com/personal-finance/financial-planning/treasury-bills.htm



inventory
nv()nt()ri/
noun
1. 1.
a complete list of items such as property, goods in stock, or the contents of a building.

An itemized catalog or list of tangible goods or property, or the intangible attributes or qualities.

Read more: http://www.businessdictionary.com/definition/inventory.html#ixzz3EAAqNRIk



Tangible goods are merchandise that you can put your hands on. Stuff like jewellery, computers,
clothing or even CD's are all tangible products.
When you go shopping in a store, everything you place in your shopping cart would be tangible
goods.
You can also shop online and add real products to your shopping cart there too. As long as
something is shipping to you it will be a tangible good.
On the other side of this are Intangible goods which are products that cannot be seen or touched.
Things like domain names or computer programs are intangible goods. Even music you download
from the web is considered intangible even though if you buy the CD it would be tangible.
Tangible means capable of being touched.
Tangible goods are physical products defined by the ability to be touched. They are distinct from
intangible goods, which may have value but are not physical entities. Goods that are tangible play a
large part in retail, though the purchasing of intangible goods is now widely available through the
Internet. They are also distinct from services, such as a spa treatment, since the result of a service is
not a tangible product.
Goods that are tangible include anything that can be physically touched, including things like printed
books, CDs and DVDs, lamps, groceries, and baseball bats. One of the easiest ways to determine
whether a good is tangible or not is to ask if a person could physically touch it or pick it up. If the
answer is yes, the good is tangible.
Digital files, though technically goods, are examples of intangible products. Downloaded video
games, applications, music files, or movies cannot physically be touched. Though they can be
bought and sold just as easily as tangible items, digital files are not inherently physical. If a person
buys music files and burns them onto a CD, however, he or she has created a tangible product, the
finished CD, from initially intangible goods.
current asset


DefinitionAdd to FlashcardsSave to FavoritesSee Examples
An asset such as receivables, inventory, work in process, or cash, that is constantly
flowing in and out of an organization in the normal course of its business, as cash is
converted into goods and then back into cash. In accounting, any asset expected
to last or be in use for less than one year is considered a current asset.
Also called circulating asset.


Read more: http://www.businessdictionary.com/definition/current-asset.html#ixzz3EABSFraO




dear money


DefinitionAdd to FlashcardsSave to Favorites
money which has to be borrowed at a high interest rate, and so
restricts expenditure by companies.


Read more: http://www.businessdictionary.com/definition/dear-money.html#ixzz3EABWdyUb



Definition of 'Dear Money'

A situation in which money or loans are very difficult to obtain in a given
country. If you do have the opportunity to secure a loan, then interest rates are
usually extremely high. Also known as "tight money".



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Dear Money
Definition Dear Money:
Dear Money is when it is expensive to borrow money because of high real interest rates.
For example, if bank rates are 10% and inflation is 6%. The effective real interest rate is 4%
which is quite high. According to the loanable funds theory, this would require a rate of
return on investment to be at least 4% of higher, to make investment worthwhile.

dear money
noun [U]
(ALSO tight money)

ECONOMICS, FINANCE money that is expensive to borrow, because the rate of interest is
high: