Definition of Cash
For an organization Cash
is the amount of money in hand that can be spent in any business purpose. This
includes both banknotes and coins. Cash is a kind of current asset that is
totally liquid in form and it is mentioned in the Balance Sheet.
Importance of Cash
The amount of money in
hand or cash is so much important for an organization because an organization must
maintain an appropriate amount of money in hand. If more cash is in hand it
indicates the inefficiency of management to use money/assets. Again if there is
less cash in hand, the firm will not be able to maintain its operation
effectively. So, the firm must maintain an appropriate amount of cash in hand
for the organization’s smooth and efficient operation.
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