Money

Meaning:

Money is defined as any medium that is widely accepted as payment for goods, services, or repayment of debts. It encompasses various forms, including cash, coins, digital

balances, and electronic transfers. Money serves as the foundation for buying, selling, saving, and investing, effectively replacing the barter system (direct exchange of goods).

Functions of Money:

Medium of Exchange : Facilitates transactions between buyers and sellers.

Store of Value : Maintains its value over time, allowing individuals to save for future needs.

Unit of Measurement:  Provides a standard metric for valuing goods and services.

Standard for Future Payments: Establishes a basis for pricing future transactions.

Difference Between Money and Cash:   Money is a broad term that includes all forms of value utilized in transactions, such as cash,  bank balances, UPI payments, cards, cheques, and digital wallets.

Cash specifically refers to the physical form of money, including paper notes and coins.

While all cash qualifies as money, not all money is categorized as cash; money represents

total wealth in various forms, whereas cash is limited to physical currency used for everyday  transactions.

Types of Money: 

Physical Money: Cash and coins.  

Digital Money: Bank balances, UPI, and net banking.

Fiat Money: Currency issued by the government.

Commodity Money: Historical items like gold that were used as money.

Importance in Finance:  

Money constitutes the backbone of the financial system, enabling borrowing, lending, investing, pricing mechanisms, and driving economic growth.

Role in Goods and Business:  

Money is vital for businesses to procure raw materials, pay salaries, manage operations, and  sell products, thereby sustaining the economic cycle and facilitating growth.