The formation of monetary funds of an organization (enterprise) begins from the moment of its creation - this is the most important aspect of the organization’s activities. In accordance with the law, the organization creates an authorized capital. Its minimum size is established by law depending on the form of ownership and determines the minimum size of the enterprise’s property, guaranteeing the interests of its creditors.
Authorized capital- the main initial source of the organization’s (enterprise’s) own funds. In accordance with the Civil Code, the size of the authorized capital cannot be less than the amount guaranteeing the interests of its creditors. It serves as a source of formation of fixed and working capital, which in turn is used to purchase fixed production assets, intangible assets, and working capital.
Own capital is the difference between the total assets of an organization (enterprise) and its liabilities, i.e. his debts. Equity capital, in turn, is divided into a constant part - authorized capital and a variable part, the size of which depends on the financial results of the organization (enterprise). Included variable capital includes:
- additional capital,
- reserve capital,
- retained earnings,
- special funds.
Additional capital is created due to the increase in property value as a result of the revaluation of fixed assets; share premium (exceeding the selling price of shares from the nominal price minus the costs of their sale); gratuitously received monetary and material assets for production purposes. It can be used to repay amounts of reduction in the value of property revealed as a result of its revaluation, to repay losses arising as a result of the gratuitous transfer of property to other enterprises and persons, to increase the authorized capital, to repay losses identified based on the results of the enterprise’s work for the reporting year.
The result and ultimate goal of the economic activity of a commercial organization is profit. After tax payments, a profit is generated that remains at its disposal, from which are formed: reserve capital (fund) and other similar reserves, as well as an accumulation fund and a consumption fund.
Spare capital (reserve fund) is the monetary fund of an organization (enterprise), which is formed in accordance with the legislation of the Russian Federation and constituent documents. The source of its formation is deductions from profits remaining at the disposal of the organization (enterprise). In all cases, the maximum amount of reserve capital cannot exceed the amount determined by the owners of the organization and recorded in its constituent documents. For joint stock companies (open and closed) and organizations with foreign investment, the formation of reserve capital is determined by law. Its value must be at least 5% of their authorized capital. Thus, the maximum amount of reserve capital is directly dependent on the size of the authorized capital. Reserve capital is formed through mandatory annual contributions until it reaches the amount established by the Charter of the company. It is intended to cover losses of the reporting year, payment of dividends in the absence or insufficiency of profit for the reporting year for these purposes, and repurchase of company shares. In world practice, the maximum amount of reserve (reserve) capital ranges from 10 to 40% of the authorized capital.
The presence of reserve capital at an economic entity is the most important factor in the stability of its activities in a market economy, a condition for ensuring a stable financial condition.
Cash reserve funds also include reserves for the depreciation of investments in securities, reserves for doubtful debts, reserves for future expenses and others created in joint-stock companies to repay bonds and repurchase shares.
retained earnings- the organization’s profit remaining after paying taxes, forming a reserve fund, paying dividends, and used for reinvestment purposes.
Savings fund- funds intended for the development and expansion of production. The use of these funds is associated both with the development of main production in order to increase the property of the enterprise, and with financial investments to make a profit.
Consumption fund- funds allocated for social needs, financing of non-production facilities, one-time incentives, compensation payments and other similar purposes.
The foreign exchange fund is formed in organizations that sell products for export and receive foreign currency earnings.
The depreciation fund is created in the process of using capital and, by its economic essence, is intended to finance the simple reproduction of fixed assets.
The use of the variable part of equity capital to fulfill payment obligations to budgets of different levels and banks is carried out in non-fund form.
Introduction.
Financial reserves are a special form of financial resources set aside by state and municipal authorities and business entities in the event of unforeseen expenses and specific needs caused by the need to eliminate the negative consequences of random, unexpected events and circumstances. Intended to finance current and capital expenditures, they are either not provided for by financial plans at all, or are provided for in smaller volumes, or are not provided with financial sources due to shortfalls in planned revenues.
The formation of financial reserves is objectively provided for by the needs of social reproduction, which requires uninterrupted financing even in the event of unforeseen events and various types of accidents. It occurs at the stage of distribution of financial resources among designated funds: the stock form of functioning of financial reserves is determined by the need for their intended use. Financial reserves are spent only upon the occurrence of events for which they were provided for, and only for purposes related to the adverse consequences of the events that occurred. If random, unforeseen events do not occur, the “saved” (remaining unspent) financial reserves act as a source of accumulation of financial resources, increasing the stability of the financial system. The processes of functioning of financial reserves and financial resources are closely interrelated: the timeliness and completeness of the formation of financial reserves largely depends on the amount of financial resources; the use of financial reserves for their intended purpose restores the normal course of the reproduction process even in the event of unfavorable events, leading to the uninterrupted formation of financial resources.
Financial reserves: types of financial reserves.
Financial reserves are divided into: budgetary, insurance, gold and foreign exchange, reserve funds of economic entities, special reserve funds of some ministries and departments. This classification of financial reserves is determined by the grouping of financial relations, their place and role in the reproduction process. In accordance with it, budget reserves contribute to the elimination of imbalances and temporary disruptions in the course of socio-economic processes; insurance reserves and reserve funds of business entities ensure, in the required scale and proportions, the continuity of the reproduction process at the micro- and macro-level, even in the event of unexpected circumstances and various types of accidents; gold and foreign exchange reserves guarantee the stability of the national currency; special reserve funds of ministries and departments and budget reserves make it possible to finance new needs arising during the financial year due to scientific and technical achievements and discoveries; Thanks to special funds of ministries, opportunities are created to reserve part of the financial resources within individual ministries.
Depending on the functional purpose, financial reserves are allocated for:
implementation of unforeseen expenses, the need for which arises during the implementation of production and financial plans - budget reserves are partially used (reserve funds of the President of the Russian Federation, the Government of the Russian Federation, executive authorities in the constituent entities of the Russian Federation, funds for unforeseen expenses, etc.) and reserve funds of economic entities, and also special reserve funds of ministries;
ensuring stable execution of budgets at all levels - all types of budget reserves are used, and, if necessary, the country’s gold and foreign exchange reserves;
ensuring industry expenses (related to new scientific and technical achievements and discoveries, providing financial assistance to enterprises, etc.) - industry funds of ministries and departments, reserve funds of the President and the Government of the Russian Federation, formed at the federal and regional levels, are used;
to cover losses and other damage caused by natural disasters, adverse weather conditions, accidents and other circumstances - a variety of insurance funds, insurance reserves, reserve (insurance) funds of business entities and (partially) budget reserves are used.
Financial reserves are also divided into: strategic, related to the development of new mineral deposits, strengthening of state borders, etc. (funds from the Reserve Fund of the President of the Russian Federation and reserve executive authorities are used); operational, designed to eliminate failures in the reproduction process of business entities (at the expense of insurance funds) or intra-annual cash gaps in the budgets of authorities at different levels (at the expense of circulating cash). The grouping of financial reserves can also be carried out depending on the level of their formation (centralized and decentralized), methods of education (budgetary, insurance, self-insurance), etc. In market economic conditions, as well as during the transition to a market, financial reserves play an important role as a stabilizer economics; Moreover, the more difficult the economic situation in the country, the greater the importance of financial reserves, on the availability and volume of which the fate of the country and its position in the global economy sometimes depends. In Russia, a significant part of financial reserves are formed at the disposal of state and municipal authorities. These include: various types of budget reserves created in federal and local budgets; gold and foreign exchange reserves of Russia; reserve funds as part of state extra-budgetary funds, etc. At the same time, the laws of a market economy, as world experience shows, dictate the need to increase the volume and provide a greater variety of forms of decentralized financial reserves formed by business entities.
In this work, I would like to consider the classification of financial reserves into: budgetary, insurance, gold and foreign exchange.
Budget reserve funds.
Budget reserve funds are a separate part of funds in budgets of all levels, in the form of targeted budget funds designed to ensure uninterrupted financing of both previously foreseen expenses and unforeseen expenses that arose suddenly and are of an emergency or accidental nature. Budget reserve funds are designed to: ensure uninterrupted financing of budgeted activities even in cases where budget revenues are lower than planned; contribute to maintaining a balance between budget revenues and expenditures, directly influencing its sustainability; act as one of the sources of compensation for damage caused to state and municipal property by natural forces; maneuver cash in order to eliminate intra-annual cash gaps; satisfy newly emerging urgent needs, eliminate imbalances that arise during budget execution.
Being a type of financial reserves, budget reserve funds are characterized by specific features: they belong to the centralized reserves of society and have a wide scope of application; they are distinguished by the scale of their influence on the reproduction process, since they contribute to the stability of the country’s economy as a whole, maintaining the stable functioning of its industries in the event of emergency and unforeseen events; their education is always compulsory and legally established; they are universal in areas of use, since they are designed to provide any additional need for funds that arises in the budget of any level due to the occurrence of unforeseen and emergency events.
The source of formation of budget reserve funds is funds accumulated in budgets of all levels. The formation of budget reserves is reflected in the expenditure side of the budget, in some cases it is shown in the balance of budget income and expenses. However, the inclusion of budgetary reserves in the expenditure side of the budget does not mean that they are a regular budget expense, since reserve budgetary funds represent a kind of reserve of budgetary resources that are mobilized into the budget, but reserved in case of the need for additional financing associated with the occurrence of unplanned events during the budget execution process. expenses. Unlike regular budget expenditures, which are carried out gradually and continuously throughout the budget year, budget reserve funds are used only during the occurrence of certain types of unforeseen events and circumstances. If such events do not occur during the budget year, then these funds remain unclaimed and must be transferred to the next year as an element of national wealth.
Reserve funds of executive authorities of the Russian Federation and constituent entities of the Russian Federation are created in the federal and regional budgets, and reserve funds of local self-government bodies are created in local budgets. The creation of reserve funds of legislative bodies and deputies of these public authorities in the expenditure side of budgets of all levels is prohibited by law, since such reserving of funds contradicts the economic nature of reserve funds. Since budget reserve funds are created in case of unforeseen or extraordinary expenses that arise during the execution of the budget, their financing is the prerogative of the executive, but not the legislative authorities. The range of issues resolved by legislative bodies is planned in advance, is not random or spontaneous in nature, and therefore must be financed in a legally established manner through the corresponding indicators of the approved budget.
The total amount of reserve funds in the federal budget cannot exceed (according to Article 81 of the Budget Code of the Russian Federation) 3% of the approved volume of budget expenditures; The size of reserve funds in the budgets of the constituent entities of the Russian Federation is established by the legislative authorities of the constituent entities of the Russian Federation when approving regional budgets for the next financial year. The use of funds from budget reserve funds occurs on the basis of decisions of those state authorities and local governments at whose disposal they were created; funds are allocated to finance unforeseen expenses, including emergency restoration work to eliminate the consequences of natural disasters and other emergencies that occurred this year; expenditure of budget reserve funds is carried out in the same forms that are used in accordance with Art. 69 of the Budget Code of the Russian Federation for the provision of budget funds to legal entities and other possible budget recipients. The form of expenditure of budget reserve funds is determined by the functional purpose of the allocated resources.
The procedure for spending funds from budget reserve funds is established by regulatory legal acts of the Government of the Russian Federation, executive authorities of constituent entities of the Russian Federation and local governments. Federal and regional executive authorities, as well as local self-government bodies, are required to inform the relevant legislative and local government bodies on a quarterly basis about the expenditure of budget reserve funds. Thanks to such information, at all levels of the budget system of the Russian Federation, current control is carried out by the legislative authorities and local self-government over the targeted and rational use of budget reserve funds.
The functioning of budget reserve funds in budgets of all levels of the budget system, the multifunctionality of their purpose requires the creation of various types of budget reserve funds. This is explained by the different composition of powers assigned to each level of government, on which the need for reserves depends and what is associated with the differentiation of types and purposes of use. In addition, the existence of many types of budget reserves is caused by a large number of unforeseen events and circumstances, the maintenance of which is entrusted to them. In Russia, the reserve funds of the budget include: the Reserve Fund of the President of the Russian Federation, reserve funds of the presidents of the republics within the Russian Federation, reserve funds of executive authorities. The excess of income over expenses generated during budget execution can also be used as a reserve.
Budget reserve funds according to their functional purpose are divided into: strategic, insurance, operational. Strategic budget reserves are intended to finance large-scale expenditures designed for the future: the development of promising high-tech industries, the development of newly discovered mineral deposits, and strengthening the country's defense capability. Funds from the reserve fund of the President of the Russian Federation and the reserve fund of the Government of the Russian Federation are partially used for these purposes.
Insurance budget reserves make it possible to ensure the uninterrupted development of the economy and the life of the population in the event of large-scale natural disasters and catastrophes, and compensate for the damage caused by such emergency circumstances. These primarily include the Reserve Fund of the Government of the Russian Federation for the Prevention and Elimination of Emergency Situations and the Consequences of Natural Disasters, which performs the functions of a centralized insurance fund. Similar funds can be created in the budgets of constituent entities of the Russian Federation. In practice, the insurance function is usually performed by the budget reserves of executive bodies of state power.
Operating budget reserves are formed for the purpose of financing unforeseen urgent events, eliminating intra-annual cash gaps, etc. To solve these problems, contingency funds, working cash, etc. are created in the budgets.
Mechanism of commercial organization Abstract >> Finance
Attracted investors through self-insurance, i.e. by creating financial reserves, diversification of the investment portfolio and commercial insurance... of capital; · reserves as one of the forms financial guarantees of solvency of a business...
With the advent of the Central Bank and the development of the financial regulation system at the state level, reserves of commercial banks, as well as credit organizations, were created. At their expense, the amount of balances on the corresponding (spare) accounts or the conditions for their replenishment are controlled. Let us next consider what the bank's required reserves are.
General information
Bank reserves ensure the availability of funds for the uninterrupted fulfillment of payment obligations related to the return of deposits to depositors and settlements with other financial institutions. In other words, they act as a guarantee. Reserves must be held in cash as deposits with the Central Bank or in the form of securities to secure obligations.
Requirements
Today, almost all countries with market economies are introducing banks. The effectiveness of this instrument of financial and credit regulation has been confirmed by both fundamental research and world practice. In the Russian Federation, minimum requirements also act as a source of repayment of obligations to creditors and depositors in the event of the revocation of an organization’s license to carry out operations. In practice, the return of funds constituting the reserve of the Central Bank is clearly regulated. Minimum requirements are mainly used within the framework of financial and credit regulation when solving long-term problems of stabilizing the circulation of money and fighting inflation. This instrument acts as a limiter on the growth rate of the cash supply and regulates the demand for bank reserves. Its specific purpose is given in Regulation No. 342. In accordance with the definition given in this act, the use of this instrument ensures regulation of the overall liquidity of the banking structure of the Russian Federation. Cash supply is controlled by reducing the money multiplier.
Main goal
In the practice of financial organizations, there is always a risk of unplanned losses. No institution is 100% immune from them. In this regard, during operation and in the process of risk regulation, each financial institution needs to ensure the formation of bank reserves. To guarantee its reliability, the organization is obliged to create various funds, the funds from which will be used to cover possible losses. The procedure in accordance with which their formation and subsequent use is carried out is, in most cases, established by legislative acts and the Central Bank. The amount of deductions from profit before taxation is regulated by the Federal Tax Law. The minimum amount of bank reserves is set by the Central Bank. As practice shows, the use of a “reserve” is appropriate if there is an objective need to reduce the money supply in circulation (to suspend or control growth) to prevent “overheating” of the economy, if to achieve this goal, restriction of the credit capabilities of financial institutions through the withdrawal of a certain share of borrowed funds from them will be used. funds (or an increase in this part). It follows from this that the reserve of the Bank of Russia is the funds of financial organizations accumulated as permanent deposits, which must be excluded from any circulation.
Classification
Bank reserves, in general, have one purpose - to compensate for probable expenses or losses if necessary. However, they are divided into types. Thus, the required reserve is an instrument through which the overall liquidity of the system is regulated. It is used by the Central Bank to ensure control of funds by reducing the accumulation of money in commercial banks. This mechanism limits the lending capabilities of financial companies and maintains the money supply in circulation at a certain level. At its core, required reserves are funds that commercial banks must keep with the Central Bank. They act as a financial guarantee fund that ensures reliability in the fulfillment of obligations to their clients. Such bank reserves are created not so much in the interests of the organization itself. They act as an instrument of state monetary policy. Being highly liquid, these assets cannot be fully used by financial institutions in the event of adverse circumstances. For example, if an institution begins to outflow depositors’ funds, then the reserve can be used exclusively within the established standard.
Fund
It is presented as part of equity capital formed by annual deductions from profits. The reserve fund is necessary to cover losses arising in the course of the activities of a financial organization. It is also created to increase the authorized capital. The standard for contributions is determined at the general meeting of shareholders. The value can be any within the established amount of the authorized capital. A financial enterprise has the right to transfer funds only when there is a profit. Its replenishment, therefore, is carried out due to the increase in the net asset. The fund accumulates funds received by a financial institution in the course of its activities. By making transfers from profits to the fund, the banking organization provides for the use of a share of its assets exclusively in certain areas. The main one is loss coverage.
Banks' reserves for probable loan losses
Their creation is determined by credit risks that may arise in the course of activity. Such reserves help prevent profit from fluctuating when loan losses are written off. Thus, the amount of capital is affected. The formation of such reserves comes from deductions that are charged to expenses for each loan. These funds are used only to cover the outstanding debt on the main obligation. These reserves are used to write off losses on loans that cannot be collected. If there is insufficient funds, debt recognized as unrealistic or hopeless is included in the losses of the reporting period. Due to this, the tax base of the financial institution is reduced.
Funds for impairment of securities
Each month, on the last working day, investments in shares are revalued at market value. The latter should be understood as the weighted average price of one security for transactions that were completed during the last day on the exchange or with the help of a trading organizer. In some cases, the actual purchase price of a security on the last business date, reduced by half, may be taken as the market value. If it is below the book price, then the financial institution must create an impairment reserve. Its value should not be more than 50% of the specified cost. Formation is carried out on the last working date of the month in which the security was purchased. Its write-off is carried out simultaneously with the disposal of the share. The creation of these reserves, as mentioned above, is carried out separately for each security, regardless of the increase or preservation of their total value.
Specifics of the impairment reserve
When revaluing investments, the need to form reserves arises. However, the securities remain unchanged. In this regard, these funds are rather considered not so much as a reserve, but rather act as an adjustment to the share price for accounting purposes. At the end of the reporting month, credit institutions must revaluate previously created reserves for depreciation of investments, taking into account the market value and number of securities.
Other types
In addition to those listed, there are other bank reserves. They are combined into a group of probable losses for other assets. These include, in particular, reserves:
- Under balance sheet assets with risk of loss.
- For a number of instruments reflected in off-balance sheet accounts.
- For urgent transactions.
- For other losses.
Classification of losses
Possible losses of a financial organization that determine the formation of reserves should be understood as hypothetical risks in the coming periods associated with the occurrence of the following circumstances:
- An increase in the amount of expenses or liabilities compared to those previously reflected in the accounting records.
- Decrease in the value of the credit company's assets.
- Failure to fulfill obligations assumed by counterparties of a financial institution for completed operations (concluded transactions) or in connection with failure to fulfill the promise of entities whose proper repayment of debt is ensured by the servicing banking organization.
Of the above bank reserves, only the fund is considered the most efficient. This is due to the fact that due to the funds that form it, a financial institution can control its expenses. All other bank reserves are not considered as effective. This is because increasing their size will not enhance the organization's ability to withstand emerging adverse circumstances.
Gold and foreign exchange reserves of the bank
They are financial assets that are highly liquid. are under the jurisdiction of the Central Bank and the Ministry of Finance. They include:
- Monetary gold.
- Special borrowing rights.
- Reserve position in the World WF.
- Foreign currency.
The value of these inventories is stated at the reporting date in US dollar terms.
Purpose
Gold and foreign exchange reserves act as a financial reserve, through which, if necessary, government debt payments can be made or budget expenditures can be carried out. Their presence, in addition, allows the Central Bank to exercise control over the dynamics of the ruble exchange rate through interventions in foreign exchange markets. The size of this reserve should largely cover the volume of money in circulation, provide for both private and sovereign payments on external debt and guarantee 3 months of imports. If such a value of gold and foreign exchange reserves is reached, the Central Bank will be able to effectively control the movement of the ruble exchange rate and interest rates.
We live in an unpredictable world. Today, a huge pile of negative factors may affect you, and this may reduce your income, sometimes you may be completely left without income. In this case, you need a cash reserve, so to speak, a financial cushion for a rainy day. If you have a family, then a cash reserve is simply necessary, since your family needs you as a breadwinner, and if something happens to you, or you are kicked out of work, then your family will have a hard time.
Having a cash reserve will allow you to live without changes for a while until you find a new job or get better. And the larger the cash reserve, the more time you will have to get back on your feet. I believe that every man with a family should consult with a specialist about his financial cushion. Experts will help you choose the right amount of reserve; investments may be the best option for you.
Having financial insurance is very important today. Let me give you a simple example. Pavel works in a very well-paid job, he can afford a lot. He has an apartment, a dacha, and a car. But then an unpleasant thing happened: Pavel suffered a nervous breakdown and now he cannot work for six months. Accordingly, no one will pay him a salary for six months either.
The question he faces is: how to use his assets to stay afloat. He has a wife and children. He must provide the same standard of living as he had before. That’s when the reserve fund that Pavel had comes to the rescue.
The reserve fund should always be at hand, so no one should borrow this money. But it is advisable to invest it. But the tools must be extremely reliable. For example, a bank deposit in this case is just right. It is better not to invest in the stock market, since the risk of losing your money in this market is very high.
It would also be nice to have reserve funds in the form of purchased real estate. Firstly, the property can always be sold, and secondly, you can receive cash flow from tenants to whom this property can be rented out.
Only you can decide how to manage the reserve fund. And I advise you to go back to a specialist to clarify the situation. Perhaps part of the money needs to be invested in a deposit, part in real estate, and the third part in more speculative instruments.
Yes, I’m sure you consider yourself healthy and you are confident in the future, but it’s still worth getting insurance. With a good reserve, you will feel confident in any critical situations.
Common reserve currencies are the American dollar, British pound, Japanese yen, Chinese yuan. The US dollar is the main currency, accounting for about 60% of total official international reserves.
Story
In 1944, as a result of the Bretton Woods agreement between delegates from 44 countries, the US dollar was adopted as the reserve currency, which was converted into gold.
In 1971, due to an increase in foreign debt and a decrease in gold reserves, the United States stopped exchanging dollars for gold. Countries switched to floating exchange rates. The dollar remained the world's currency reserve as a stable and liquid medium of exchange, alongside which the British pound was used. The euro, introduced in 1999 (in cash circulation since 2002), ranks second after the US dollar in distribution with a share of about 20% in the world basket of currencies.
Species
Reserve assets in the balance of payments are:
- cash in foreign currency;
- gold reserves;
- bank deposits abroad;
- reserve positions in the IMF;
- SDR, or special drawing rights;
- debt securities (treasury bills, bonds).
Functions
The state's foreign exchange reserves are formed and used in accordance with its monetary policy. The more foreign exchange reserves accumulated, the greater the central bank's ability to reduce the volatility of the domestic currency. The main functions of international reserves include:
- ensuring solvency. Holding foreign exchange reserves increases a country's solvency because convertible assets can be used to pay off external debt obligations or pay other capital expenditures. Foreign exchange reserves help maintain liquidity in the event of economic crises when the supply of foreign currency is insufficient to pay for imports;
- impact on the exchange rate. In a floating (market) exchange rate regime, central banks indirectly influence quotes by intervening in the open market. They purchase or sell foreign currency to adjust the value of the domestic currency in relation to the foreign one. In the first case, the price and purchasing power of the domestic currency decreases (usually to increase the competitiveness of products on the world market), in the second, it increases due to increased demand (to prevent devaluation);
- carrying out international trade. Countries accumulate foreign exchange reserves to trade internationally because most commodities, including gold and oil, are valued in world currency units. This protects the local currency from volatility in exchange rates. Large holders of international reserves are China, which holds 3.1 trillion in US dollar assets, and Japan, which has foreign exchange reserves of 1.2 trillion. US dollars.
