Credit and crediting (topic)

 Credit – transecting between twoparties in which one (the creditor or lender) supplies money, goods/services,or securities in return for a promised future payment by the other (the debtoror borrower). [Creditor is someone who money is owed to. Debtor is someone whoowes money]. Credit given is an indication of trust in that person to pay forthe goods given or money lent. Credit transections normally include the paymentof interest to the lender. Credit may be extended by public or privateinstitutions to finance business activities, agricultural operations, consumerexpenditures, or government projects. Most modern credit is extended throughspecialized financial institutions, of which commercial banks are the oldestand most important. The lender must judge each loan he makes on the bases ofthe character of the borrower (his intention to repay), his capacity to repay(based on his potential for earning income), and his collateral (property orother goods that you promise to give someone if you cannot pay back the money(they lent you). [Loan is an amount of money that you borrow from a bank].Customers and lenders may publicly regulate the terms of credit transections toprevent abuses.


  1. What is meant by the term credit?
  2. What does credit normally include?
  3. What institutions may extend credit?
  4. What may credit finance?
  5. How is most modern credit expended?
  6. How must the lender judge each the loan?
  7. What does the character of the borrower imply?
  8. What is the debtor’s capacity to repay basedupon?
  9. What does the debtor’s collateral imply?


Marketing and its functions.Marketing is the ability to asses,by whatever means, the needs of the consumer, then using the availableresources, design, produce, advertise, and deliver the goods at the right timeand at the right place and price to the customer. Marketing’s principalfunction is to promote and facilitate exchange. Through marketing, individualsand groups obtain what they need and want by exchanging products and serviceswith other parties. Such a process can occur only when there are at least twoparties, each of whom has something to offer. In addition, exchange cannotoccur unless the parties are able to communicate about what they offer and todeliver what they offer. Marketing is not a coercive process: all parties mustbe free to accept or reject what others are offering. So defined, marketing isdistinguished from other modes of obtaining desired goods, such as through self– production, begging, theft, or force. Marketing is not confined to anyparticular type of economy, because goods must be exchanged and thereforemarketed in all economies and societies except perhaps in the most primitiveone. Furthermore, marketing is not a function that is limited to profit –oriented business, even such institutions as hospitals, schools, and museumsengage in some forms of marketing. 


Money and its functions.

Money is a commodity commonlyaccepted as a medium of economic exchange. The idea of money as a universalequivalent is familiar to us since our childhood.Money circulates from person to person and country to country, thusfacilitating trade, and it is the principal measure of wealth. Money has four functions: 1)to serve as a medium ofexchange, a commodity universally accepted in exchange for goods andservices and for the discharge of debts orfor the discharge of contracts; 2)to act as a unit of account, theunit that makes the operation of the pricesystem possible and provides the basis for keeping accounts and calculating cost, profit, and loss; 3) to serve as a standard of deferredpayments, the unit in which loans arcmade and future transactions arcfixed; |4) to provide a store of wealth,a convenient form in which tohold any income not immediately required for use. 


  1. What is meant by the term “money”?
  2. How many functionsdoes money have?
  3. What does moneyserve as?
  4. What does moneyact as?
  5. What does money make?
  6. What does money provide?
  7. What does money calculate?
  8. What is the third function of money?

What is finance?

Thе field offinance is broad and dynamic. It directlyeffects the lives of every person andevery organization, financial and non – financial, private or public, large orsmall, profit – seeking or non – profit. Finance can be defined as the artscience of managing money. All individuals and organizations earn or raisemoney and spend or invest money. Finance is concerned with the process,institutions markets, the instruments involved in the transfer of money amongand between individuals, businesses and governments.   Finance can be defined at both the aggregateor macro level and the firm or micro level. Finance at the macro level is thestudy of financial institutions and financial markets and how they operatewithin the financial systems.  Finance atthe micro level is the study of financial planning, asset management, and fundraising for business firms and financial institutions. Finance has its originin the fields of economics and accounting.

Bank and its classes

Bank – is an institution that deals in money and it substitutes andprovides other financial services. Banks accept deposits and make loans andderive a profit from the difference in the interest rates. They also have thepower to create money. The two major classes of banks are commercial andcentral banks. Commercial banks accept savings deposits, make loans and otherinvestments and offer financial services that facilitate the exchange of fundsamong individuals and institutions. In addition to the profit derived from thedifference in the interest rates, commercial banks charge fees for variousservices. Central banks are involved in the issue of money and maintain thecountry’s foreign currency reserves. Central banks maintain the accounts ofother banks and supervise their activities. Central banks act as bankers togovernments, as the designers of monetary and credit policies and as lenders oflast resort to commercial banks in the case of a financial crisis. Centralbanks also play a significant psychological role as guarantors of the monetarysystem. Central banks may be nationalized organizations and are subject togovernment control, but some of them can have independence from governmentalsupervision.

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