Cash refers to money in its most physical form, i.e. banknotes and coins (currency). Technically, it also includes short-term deposits, checks and other negotiable instruments. But in layman’s terms, it just means coins and notes.
In finance and bookkeeping, the term means a company’s current assets, which include currency or currency equivalents that are immediately or near-immediately accessible.
There are several slang terms for cash, including dough, bread, and reddies (UK: dosh, lolly).
In business, cash may also be seen as a reserve for payments in case the company suddenly has liquidity problems, or as a buffer to protect against a downturn.
People today rarely hold onto their savings in the form of cash. Society is becoming progressively cashless.
The verb ‘to cash’ means to convert something into liquid money, as in the expression “to cash a check.”
Where does the term ‘cash’ come from?
The English term either came from the romance languages or southern India.
In accountancy, the amount of cash and cash equivalents is reported on the balance sheet as the first item of current assets. The term cash equivalents refers to assets that can be turned most rapidly into cash.
Romance languages – the modern English word is believed to have either come from the French word caisse which means (money) box, the Provençal word caissa, Italian cassa and Latin capsa (all meaning box).
In the 18th century, the term changed from just meaning a box containing money to money itself.
Southern India & Sri Lanka – some people say the term came from the Tamil word kāsu (Tamil: காசு), which means a coin, and was brought to Europe by the East India Company.
“Coins and banknotes, as well as short-term deposits, cheques and other negotiable instruments that can be readily exchanged into coins and banknotes.”
Demand for cash declining
Cash makes up a much smaller part of the money supply today compared to many years ago. Its current role is to provide a form of payment and currency storage for people who do not want to use financial services.
It is also a popular way of making small payments, however, this is rapidly being replaced by electronic payment systems. As debit card usage has grown, the demand for cash has declined.
Even so, the amount of cash in circulation has risen. The value of US dollars in circulation grew by 42% from 2007 to 2012, and that of the British pound increased by 29% from 2008 to 2013.
‘Cash’ should not be confused with cash flow, which is the movement of funds in and out of a company, organization or an account.
Businesses and other organization keep a small amount of coins and notes on hand for making minor payments – this is known as petty cash. The individual responsible for petty cash is known as the petty cash custodian or petty cashier.
Video – Petty Cash