Financial Intermediaries and The Euro Markets Essay

Financial Intermediaries and The Euro Markets - Essay Example According to the research findings the financial environment therefore directly or indirectly influence the financial system of any country. Thus the need for financial intermediaries to act as the middlemen in this transactions is important. Therefore for investors to get profit and the lenders to be able to give away money to borrowers the need for financial markets are vital. Financial intermediaries can be defined as an institution that acts as the middlemen between the investors and the firms. These financial institutions include chartered banks, insurance companies, investment dealers, mutual funds, and pension funds. Liquidity has been the basis of these kind of transactions between the parties either the borrowers or the investors. It can be defined as the ease with which a given asset can be changed into cash or by getting access to credit. Thus the main concept of liquidity is to obtain cash. Liquidity is often determined by two factors that measure how easy it is to change it into cash or make it possible for borrowers to obtain the cash. The policy interest rates and the structure of the interest rates paid by the borrowers are often the indicators of liquidity. These rates often influence one either to be motivated to borrow or leave the money with the banks. Most of the world banks are involved in market liquidity which is the rate at which a borrower is able to quickly buy or sell the financial assets at a given time without changing the market price. (Francis 2008). In the new world there are financial institutions that stand in between parties in any kind of transaction that involve cash. Thus Financial Intermediaries are firms that buy or borrow from consumers or savers and later lend these services or would be cash to other companies or persons that might need resources for investment. Therefore there are different kinds of investments. The insurance policies, buying of stocks, bonds, government treasuries, and mutual funds. All these investm ents either involve the public investor or the government and the company. Investments that involve a company or the government selling to the public are easily convertible to cash since the purpose of the public is to get cash for their daily living. Moreover, the investments by the government are more liquid than those in the company (Levine 1993). Mutual funds can easily be changed to cash than all the others while the others. Insurance policies since they are the contract or an agreement between the insurer and the insured are difficult to change into cash since one can only pay the amount after a certain incident happens that is often unkown when it will occur. The the government treasuries and mutual funds are just agreements that do not involve cash and thus take time to be converted to cash and the remaining are easily converted in this order: Stocks, and bonds. Therefore in the order of their liquidity they would be: mutual funds as the most liquid asset, then the governmen t treasuries, bonds, stock, and then the insurance pilies as the least liquid asset. Conclusion Financial intermediaries therefore play a vital role in the national economy of any country. In most economies people with more money save them in banks that makes it possible for those with little money to borrow so that they would be able to use them either to run a business or other functions depending on their need. Thus a financial institution such as banks facilitate the flow of funds from savers to borrowers. The financial institutions profit from the spread between the amount they pay for funds and the

Accounting information systems development Essay

Accounting information systems development - Essay Example The company in this scenario is a small, local CPA firm. The personnel at the organization include three new CPAs and an office manager. Primarily, the company's business consists of tax and write-up work.However, recently the company has required a new client: a homeowner's association with a total of 150 homeowners.The firm has agreed to provide the homeowner's association with several services. There are six service areas that the company has agreed to service the homeowner's association with: billing, collection, payments, reporting, tax, and advisory. With billing, each homeowner will be sent an itemized bill each quarter, dues being payable by the month. Late fees accumulate at one percent of the unpaid balance each month that passes. On the first day of the last month of the quarter, bills are mailed out to the homeowners, and payment is expected by the quarter's end.With collection, the accounting firm is responsible for collecting the payments from the post office box that i t has rented specially for the homeowner's association. They are also responsible for depositing the checks they collect.With the large, new client, the company is hoping to expand that area of their practice by computerizing the main functions of their system. The goal of the company is to computerized the system's main functions. The main focus of the computerization will be on billing and reporting. Other than the actual interface of the new system, the checking account, financial statements, and tax preparation parts will not be computerized at this time. Instead, the billing and collections portions of the system will be computerized. The System and Manual Functions (Inputs, Outputs, and Controls) BusinessTown (2008) tell us to "Think of the accounting system as a wheel whose hub is the general ledger (G/L). Feeding the hub information are the spokes of the wheel. These include accounts receivable, accounts payable, order entry, inventory control, cost accounting, payroll, and fixed assets accounting." Each of these items is a subledger of the general ledger, and each summarizes the entries and then feeds that information to the general ledger. There are a few differences between manual and automated ledgers. In order to consider this, think of the general ledger as a piece of paper that shows assets, liabilities, income, and expenses where all transactions are recorded by hand in a manual fashion. While some of the entries from the different subledgers flow upwards, others are entered manually through the utilization of a general journal entry. "The same concept of a sheet of paper holds for each subledger that feeds the general ledger. A computerized accounting system works the same way, except that the general ledger and subledgers are computer files instead of sheets of paper. Entries are posted to each and summarized, then the summary is sent up to the G/L for posting" (BusinessTown, 2008). Billing is the first component that will be computerized at the firm. This will be highly beneficial to the organization since "Accounting firms can improve their profitability and relations with clients by automating client billing with computers. Accounting firms c