| 423.13.4:
FINANCE: SOURCES AND DOCUMENTS |
| The economic activities in the modern world center around the use of money. When money is used for any activity it is known as Finance. In other words Finance means making money available when it is needed. Depending upon the purpose to be served, we may distinguish between three types of finances: |
1. |
Long Term Finance - Funds which are required to be invested for a long period. |
2. |
Short Term Finance - This type of finance refers to funds needed to meet day to day requirements. |
3. |
Medium Term Finance - Finance required for any specific purpose for a period of two to five years. |
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The financial resources may be provided either by the owner's fund or by the borrowed's funds. |
| Financial Documents are needed in all sorts of financial dealings. A proprietor in the proprietary form of business deal with bills and promissory notes. Partners too deal with them. Company form of business organizations have shares, debentures and other types of financial documents. Each one of them prepare profit and loss accounts and balance sheets. The common people too interact with them as share holders and debenture-holders. Thus the list of the financial documents appears to be an endless one. Which are discussed in following subunits. |
The financial resources may be provided either by the owner's fund or by the borrowed's funds. |
Financial Documents are needed in all sorts of financial dealings. A proprietor in the proprietary form of business deal with bills and promissory notes. Partners too deal with them. Company form of business organizations have shares, debentures and other types of financial documents. Each one of them prepare profit and loss accounts and balance sheets. The common people too interact with them as share holders and debenture-holders. Thus the list of the financial documents appears to be an endless one. Which are discussed in following subunits. |
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423.13.4.1: NEGOTIABLE INSTRUMENTS |
| A Negotiable Instrument is one in which the true owner could transfer, the Contract or Engagement contained therein by simple delivery of the "instrument". Thus a Negotiable Instrument means a Promissory Note, a Bill of Exchange or a Cheque payable either to order to a bearer. |
| It is a document evidencing an obligation which - |
i) |
is transferable by mere delivery. |
ii) |
such delivery operate to transfer all legal rights to the obligation evidenced. |
iii) |
Is free of any defects in the transferee's title. |
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| In India, Government Promissory Notes, Shahjog Hundis, Delivery order and railway receipts for goods have been held to be negotiable by usage or custom. |
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