First of all, the financial activities they are activities that companies undertake to help achieve their economic goals and objectives. They include events and transactions that affect a company's equity and long-term liabilities. Anything that has to do with the movement of money, that is, cash inflows and outflows, is a financial activity.
Buying and selling assets or products, organizing accounts, and maintaining accounts, for example, are financial activities. Organizing loans, selling bonds or stocks are also financial activities.
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They show how a company finances its operations and expansions externally. Internal financing is not included. For example, a company that pays for the expansion of its own plant does not need financing. Therefore, there are no financial activities because the expansion does not modify the equity and liability accounts.
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Investors and creditors alike are interested in seeing how efficiently a company can use its existing cash to fund operations and how effectively you can raise capital for the next few Projects. In a way, the financial activities section of the cash flow statement indicates how liquid a business is.
On the other hand, public finance law involves all aspects of financing activities for entities or projects that can obtain tax-exempt loans.
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These entities or projects consist of a variety of government issuers, including states, municipalities, counties, government agencies, and economic development agencies; non-profit borrowers, such as schools, hospitals, and cultural institutions; and projects, such as student loans, affordable housing, and solid waste disposal, among others.
In this article you will find:
What is the financial activity of the State?
A state financial activity o Public finances are related to monetary flows to and from other sectors, that is, the public, the banking system, and so on. Basically, they are the study of government activities that can include expenditures, deficits, and taxes.
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The objectives of financial activity are to recognize when, how and why the government should intervene in today's economy, and also understand the possible results of making changes in the market. In addition, these activities can involve problems outside the economy, including accounting, legal and public finance management.
Understand the role of government and how changes can affect the economy are some important aspects of public finance professionals. When the government intervenes and takes action within the economy, the results are classified into one of three categories: economic efficiency, income distribution, or stabilization macroeconomic.
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Government earned income is received from sources such as taxes collected on the income and accumulation of wealth from individuals and corporations and on goods and services produced, exports and imports, non-taxable sources such as income from government-owned corporations, central bank income and capital
Types of financial activities of the state
Public revenue
As the name suggests, the public income refers to government income. The government obtains revenue in two ways: tax revenue and non-tax revenue. Tax income is easy to recognize, it is the tax paid by the people of the country in the form of income tax, sales tax, duties, etc.
On the other hand, nontax income includes interest income from lending money to others countries, rent and income from government property, donations from global organizations, etc.
This area studies tax methods, income classification, methods of increasing government revenue and their impact on the overall economy, etc.
Public expenditure
Public spending is money spent by government entities. Logically, the government is going to spend money on infrastructure, defense, education, medical care, etc. for the growth and well-being of the country.
This area studies the objectives and classification of public spending, the effects of spending in different areas, the effects of public spending on various factors such as employment, production, growth, etc.
Public debt
When public spending exceeds public income, the gap is filled by borrowing money from the public or from other countries or global organizations like the World Bank. These borrowed funds are public debt.
This area of public finance explains the burden of public debt, why it is necessary, and its effect on the economy. It also suggests methods for managing public debt.
Financial administration
As its name suggests, this area of public finances has to do with the administration of all public finances, that is, public revenues, public spending and debt. Financial management includes the preparation, approval, and implementation of the budget and various government policies.
It also studies the impact of politics on the socio-economic environment, intergovernmental relations, foreign relations, etc.
Objectives and functions
The objectives of public finances that include fiscal policy are the following:
- Price stabilization
Public finances maintain the stability of the prices of goods and services, thus avoiding the constant fluctuations and inflation and deflation that tend to destabilize the economy of a country.
- Equitable distribution of wealth
Public finance is also concerned with the equitable distribution of income and wealth among individuals and various sections of the country.
- Satisfaction of needs
The satisfaction of collective needs is another main objective of public finances.
- Resource allocation
Public finances fulfill the function of allocating resources between the public and private sectors.
- Provision of full employment
The provision of full employment opportunities for the citizens of a country is another objective of public finance.
- Maintain a favorable balance of payments
Tariffs and other fiscal policies are used to maintain a favorable balance of payments for a country.
Each country will have its financial activity which will be representative to know if the State is effective both economically and politically to meet public needs and if they have the resources to respond to they.
