Essence of Money
Essay about different Money and its realtion to the Financial Statements and there timeliness.
Motivation
As is generally known, there are three Functions of Money for natural Persons.
- Unit of Account
- Store of Value
- Medium of Exchange
This Essay will show how we can connect them with the different Kind of Money and the Financial Statements and their Operation in Time.
Argumentation
Book Money
Book Money as the highest Form of Money is made out of Data, so to speak out of economized Information. It touches the Future by the Valuation of tomorrow's Income and it is Rentability Driven. It serves the Economy as Calculationunit; therefore its Function as Unit of Account. On the Financial Statements it lives under Accrual Accounting on the Income Statement.
Rationale
Book Money is described this Way because its the most Abstract to Understand.
Commodity Money
Commodity Money as the middle Form of Money is made out of Wares, so to speak out of economized Matter. It touches the Past by the Accumulation of Yesterday's Income and it is Solvability Driven. It serves the Economy as Valueunit; therefore its Function as Store of Value. On the Financial Statements it lives under Fair-Value Accounting on the Balance Sheet.
Rationale
Commodity Money is described this Way because its the second Abstract to Understand.
Credit Money
Credit Money as the lowest Form of Money is made out of Service, so to speak out of economized Energy. It touches the Present by the Tit-for-Tat of Today's Income and it is Liquidity Driven. It serves the Economy as Transferunit; therefore its Function as Medium of Exchange. On the Financial Statements it lives under Cash Accounting on the Cash Flow Statement.
Rationale
Credit Money is described this Way because its the least Abstract to Understand.
Fazit
The Essay reflects the Authors understanding of Money from the Perspective of a natural Person. For Businesses and Corporations up to Countries, it should look, in Essence the same, even if Operations get much more Complex and Causality Chains get much longer.