No matter what the size or nature of the organization, money is the basic requirement of each company, as it helps the company survive and grow. The entrepreneur can bring that money by himself or borrow it from a bank or financial institution. In this context, the terms as cash and fund are often discussed and used as synonyms, but there is a fine line of difference between them. Then, read this article to understand the two concepts.
|Sense||Money, that is, government-recognized bills and coins that are used to exchange goods and services, is known as cash.||Any sum of money in the reservation form that is saved for a given purpose is known as the Fund.|
|Consists in||Only money||Money, credit and type.|
Money other than checks or cash equivalents such as negotiable securities, commercial papers or government bonds, etc. Coins or banknotes, the physical form of the currency authorized by the government to be used for the exchange of goods or services is known as cash. In business, it is known as the most liquid current asset, since cash can be used to make a quick payment of any expenses.
Money, whether in the form of cash, credit or type that is retained for a specific object, is known as the Fund. It can be charged to the public and saved in the form of reservations or invested in any other entity. In business, the fund's responsibility can be of several types: Shareholder Fund, Creditors Fund, Employee Pension Fund, Workers Compensation Fund, etc.
Key differences between cash and fund
The points given below are notable, as regards the difference between cash and fund:
- Cash is a current asset, while the Fund is a liability that can be current or non-current.
- The cash contains the currency only physically, while the fund contains cash, credit, check, type, etc.
- The fund has a bigger focus than cash.
- Cash is liquid, while the fund may or may not be liquid.
Cash and Fund, both are the prerequisites of any company to execute its operations smoothly and efficiently Cash can easily be used to pay expenses, government fees or pending liabilities of the organization. On the other hand, funds block money for a longer period of time; which can be used for other purposes, such as investing it to obtain higher returns in the future.