ACC 205: INTRODUCTION TO FINANCE

DEFINITION OF FINANCE According to Hornby (2001), finance is the money needed to support an activity, project, programme etc. and or the management of money. Finance is a term for matters regarding the management, creation, and study of money and investments. Finance can be broadly divided into three categories: public finance, corporate finance, and personal finance. There are many other specific categories, such as behavioural finance, which seeks to identify the cognitive (e.g., emotional, social, and psychological) reasons behind financial decisions. Finance specifically deals with the questions of how and why an individual, company or governments acquire the money needed-called capital in the company context and how they spend or invest that money. Finance is then often split into the following major categories: corporate finance, personal finance and public finance. “Finance is the procurement (to get, obtain) of funds and effective (properly planned) utilization of funds. It also deals with profits that adequately compensate for the cost and risks borne by the business.”