DOMINGO, Celine Elaiza B.

BAS FIN – Sec 3

What is Finance?

Finance is a field that deals with the study of investments. It includes the dynamics of
assets and liabilities over time under conditions of different degrees of uncertainty and
risk. Finance can also be defined as the science of money management. Finance aims
to price assets based on their risk level and their expected rate of return. Finance can
be broken into three sub-categories: public finance, corporate finance and personal
finance.

Importance of Finance to Tourism

Financial Management means planning, organizing, directing and controlling the

financial activities such as procurement and utilization of funds of the enterprises. It
means applying general management principles to financial resources of the enterprise.
Tourism is travel for recreation, leisure, religious, family or business purposes, usually
for a limited duration. Tourism is commonly associated with international travel, but may
also refer to travel to another place within the same country. The study is descriptive in
nature to study the role of Financial Management in Tourism sector and how financial
management applies to Tourism sector.

History of Money

The history of money concerns the development of means of carrying out transactions
involving a medium of exchange. Money is any clearly identifiable object of value that is
generally accepted as payment for goods and services and repayment of debts within a
market, or which is legal tender within a country.

Due to the complexities of ancient history (ancient civilizations developing at different

paces and not keeping accurate records), and because the true origins of economic
systems precede written history, it is impossible to trace the true origin of the invention
of money and difficult to trace the transition from a "barter system" to a "monetary
system".

In the ancient histories[1], we find evidence that money has taken two main forms
divided into the broad categories of money of account (debits and credits on ledgers)
and money of exchange (tangible media of exchange made from wood, paper, bamboo,
metal, etc.), and it is debated which was created first.

We also find evidence that many things were used on occasion in ancient markets that
could be described as a medium of exchange. These included livestock and grain –
things directly useful in themselves – but also merely attractive items such as cowrie
shells or beads were exchanged for more useful commodities. However, such
exchanges could be described as barter and the common bartering of a particular
commodity (especially when the commodity items are not fungible) does not technically
make that commodity "money" or a "commodity money" like the shekel – which was
both a coin representing a specific weight of barley, and the weight of that sack of
barley.

Regarding money of account, we find evidence of what can reasonably be described as

the invention of a very primitive ledger in the form of the tally stick – the oldest of which
is dated to the Aurignacian, about 30,000 years ago. While it may not be reasonable to
conclude that the use of the most ancient tally sticks found to keep accounting records
in the monetary system sense of the term, it does however show that "accounting" –
keeping a written record of things counted – is far more ancient than many people
assume. David Graeber proposes that money as a unit of account was invented when
the unquantifiable obligation "I owe you one" transformed into the quantifiable notion of
"I owe you one unit of something". In this view, money emerged first as credit and only
later took the form of a medium of exchange.

Regarding money of exchange, the use of representative money historically pre-dates

the invention of coinage. In the ancient empires of Egypt, Babylon, India and China, the
temples and palaces often had commodity warehouses which issued certificates of
deposit as evidence of a claim upon a portion of the goods stored in the warehouses, a
form of "representative money”

While not the oldest form of "money of exchange", we find various metals, both common
and precious metals, from which early coins were made, were used in both barter and
monetary systems. It is the use of these substances where we find the transition from
the barter system to the monetary systems most easily illustrated. While not among the
more ancient examples, the Romans' use of bronze illustrates this distinction clearly in
the transition of the use of "aes rude" (rough bronze - which is still properly the barter
system - the value of the bronze was related to its use in blacksmithing), into bars that
had a 5 pound pre-measured weight to make barter easier, called "aes signatum"
(signed bronze - which is still properly the barter system like the aes rude), and finally,
there was a break from barter system related weights based on the usefulness of
bronze in blacksmithing (heavy measures of bronze as bars), into weights measured
into coinage (lighter measures of bronze), recognising the usefulness of bronze as a
medium of exchange for transactions, not just for making tools. The aes grave (heavy
bronze) (or As) is the start of this in Rome, but not the oldest known example.