Cash can be defined as the money readily available with the enterprise, in the form of currency notes and coins. On the other hand, funds refer to each and every financial resource of a firm like cash, bank balance, accounts receivable and so on. It is something, which kept aside by the organization for a distinct objective.
No matter what the size or nature of the organization is, money is the basic requirement of every enterprise, as it helps the business to survive and grow. The entrepreneur either brings that money by itself or borrows it from a bank or financial institution. In this context, the terms like cash and fund are often discussed and are used as synonyms, but there is a fine line of difference between them. So, take a read f this article to understand the two concepts.
Content: Cash Vs Fund
Comparison Chart
| Basis for Comparison | Cash | Fund |
|---|---|---|
| Meaning | Money i.e. bank notes and coins recognized by the government used in exchange of goods and services is known as Cash. | Any sum of money in the form reserves which is saved for a certain purpose is known as Fund. |
| Type | Asset. | Liability. |
| Consist of | Money Only. | Money, Credit and Kind. |
| Scope | Narrow | Wide |
Definition of Cash
Money other than cheques or cash equivalents like marketable securities, commercial papers or government bonds, etc. The coins or bank notes, currency’s physical form 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 the cash can be used to make a prompt payment of any expenses.
Definition of Fund
Money whether in the form of cash, credit or kind is preserved for a specific object is known as the Fund. It can be collected from public and is saved either in the form of reserves or invested in any other entity. In business, the liability of fund may be of various kinds – Shareholder’s Fund, Creditors Fund, Employees Provident Fund, Workmen Compensation Fund, etc.
Key Differences Between Cash and Fund
The points given below are noteworthy, so far as the difference between cash and fund is concerned:
- Cash is a current asset while Fund is a liability which may be current or non-current.
- Cash contains currency in physical form only, while fund contains cash, credit, cheque, kind, etc.
- The fund has a bigger approach than cash.
- Cash is liquid while the fund may or may not be liquid.
Conclusion
Cash and Fund, both are the prerequisites of any business to run its operations smoothly and efficiently. Cash can be used readily to make the payment of expenses, government dues or outstanding liabilities of the organization. On the other hand, funds block the money for a longer period of time; that can be used for other purposes such as investing it to fetch higher returns in the future.
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