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A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.
What is a Fund?
1. Money that is set aside for a particular purpose. 2. To provide money for paying off the interest or principal of (a debt). 3. To finance, using long-term debt or Capital.
1. Finance 2. Support 3. Back 4. Furnish
Fund = Capital
We use the phrase "We need additional funds" to mean we need additional capital whether be it for acquiring assets, clearing liabilities or for meeting expenses. This indicates that Fund means Capital. All capital of the organisation whether owned or loaned is capable of being called Fund.
Fund is Capital freely available for use
A Fund by its nature would be capital kept aside with a purpose. The fund should be capable of being used for the specified purpose at any time. Fund, in the topic Funds Flow Analysis, is a general purpose fund. It represents capital resource that would be available to the organisation for general purposes. It would be
the assets supporting capital change.00.000 1.000 1. Liabilities supported by Assets : Capital is supported by cash 2. Furniture and Stock 2.000 and Stock Worth Rs. Whereby. Every rupee of an asset is financed by a rupee of a liability. The Balance Sheet after these transaction would be : Balance Sheet of M/s ___ as on 31st December __ Liabilities Capital Amount Assets Amount 50.000 Cash 2.000 1.00. we can say that Furniture is financed by Capital.00.00.00. 1. Assets financed by Liabilities : Cash.000 have been bought for cash. Furniture worth Rs. . The organisation's Balance Sheet immediately after this first transaction would be: Balance Sheet of M/s ___ as on 31st December __ Liabilities Capital Amount Assets Amount 2. the liability that was being supported by the replaced asset would now be supported by the new asset. 2. Furniture and Stock are financed by Capital Capital/Cash is employed in purchasing Assets Since Cash used in purchasing Furniture was financed by Capital.00. On converting an asset into a new one. we say that capital is employed in purchasing furniture. Liabilities supported by Assets : Capital is supported by Cash. Assets financed by Liabilities : Cash is financed by Capital The next day.00.000 Cash Furniture Stock 2.000 brought in cash.00.000 50. Fund is Capital supported by Current Assets Every rupee of a liability/capital is supported by a rupee of an asset.000 2.00. Consider a new business that has been started with a capital of Rs.000 2. Therefore.00. 50.000 2. on employing capital.capable of being used in any manner the organisation prefers without any restriction/hindrance.000 2.
Fund is capital supported by easily convertible assets + Current Assets are easily convertible assets. In Progress Current Assets are assets that are capable of being liquidated in a time span of a year or less. for long term or short term needs. Synonyms 1.e. both of them have a short life span (a year or less). funds (capital that we call funds) should be supported not just by assets which are convertible but by assets that are easily convertible. Current Assets are easily convertible Current Meaning 1. Fund is Capital supported by easily convertible Assets Fund is capital freely available for being used in any which way the organisation intends i. 2. Current liabilities have a charge on current assets. To enable such usage. They represent easily convertible assets. . Present 2. ⇒ Fund is capital supported by Current Assets Funds exclude Current Liabilities Current Liabilities Current liabilities are liabilities that are to be repaid/cleared within the near future (a short period of time). the asset that is supporting it should be easily convertible. Belonging to the present time.Capital that can be employed To be able to employ capital for any purpose. Recent 4. Current liabilities are considered to be supported by current assets as they are similar in nature i. occurring this period. Not overdue.e. Existing 3.
capital supported by current assets excluding current liabilities would only be considered as fund. ii. To move or run smoothly with unbroken continuity like in the case of a fluid. All the capital that is supported by current assets cannot be said to be freely available for use without any hindrance. iii. since they are to be repaid within a short time span Therefore.Current Liabilities.Current Liabilities Fund = Working Capital Excess of Current Assets over Current Liabilities is Working Capital ⇒ Working Capital = Current Assets .] ⇒ Funds = Current Assets . Something that resembles a flowing stream in moving continuously Synonyms i. We do not consider Current liabilities to be representing capital that is freely available for use. ⇒ Fund = Working Capital What is Funds Flow? Flow Meaning i. ii.Fund is capital that is freely available for use for any purpose the organisation intends without any hindrance/restriction. Stream Gush Course .Current Liabilities Fund is freely available capital + Fund is capital supported by Current Assets + Fund is capital supported by current assets excluding current liabilities [Current assets in excess of those supporting current liabilities support funds. Fund = Current Assets .
It involves information relating to the various transformations undergone by working capital (i. There is a flow whenever there is a change A change in fund (working capital) in the organisation is an indication of flow of fund. An inflow would result in an increase in fund which would be set off by an outflow resulting in a decrease. An increase would indicate an inflow and A decrease would indicate an outflow.Funds Flow Fund being working capital. the changes that have taken place in working capital) during the period involved between the two points of time. the fund seems to be unchanged. there may not be a change in fund (working capital). Hidden/Masked flows When there is an inflow followed by an outflow of the same magnitude. An inflow would result in an increase and An outflow would result in a decrease. Every change in working capital is associated with (or is on account of) a flow either an inflow or an outflow. Since the magnitude is the same. Funds flow indicates the flow of working capital between two points of time. we will have to break down the transactions into two instead of viewing them in total. funds flow involves information relating to the inflows and outflows that resulted in a change in working capital between the two points of time. . The Fund is analogous to water and the reservoir to the organisation. to notice the change. Thus. When do we say that there is a flow of fund? Fund (Working Capital) in an Organisation is like water in a reservoir. In such situations.e. There is a change whenever there is a flow There would be a change in fund (working capital) whenever there is a flow (in/out) of fund. after the two transactions.