Cash or its equivalent, e.g. checks, drafts, money orders. The term may be used to include securities which have a ready market and can be quickly liquidated. It is common to hear the expression liquid funds, meaning cash, and tied-up funds, meaning money invested in income-bearing assets.
Funds also refers to assets in special funds for specific purposes, some of which are unavailable for normal operations because of indenture or other contractual arrangements. Current funds include petty cash fund, payroll funds, and others. Long-term funds are used to retire long-term liabilities (sinking funds), preferred stock (stock redemption funds), and to purchase long-term assets (plant expansion funds). Long-term funds are reported as investments on the balance sheet. A fund actually sets aside cash and other assets to achieve specific objectives. An appropriation of retained earnings is not a fund but merely discloses managerial policy or legal or contractual restrictions. An appropriation of retained earnings does not provide cash.
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