Basic concepts of finance

Finance is a system of economic relations that arise between the state, legal entities and individuals, between individual states regarding the formation, distribution and use of funds of funds. In other words, monetary relations, the implementation of which occurs through special funds, are financial relations.

Thus, finance is an integral part of monetary relations. However, not all monetary relations are financial relations. Finance differs from money both in content and in the functions performed.

Finance is an economic tool for the distribution and redistribution of the gross domestic product, an instrument for controlling the formation and use of funds of funds.

The essence of finance is manifested in their functions: distributive, control, stimulating, fiscal.

The distributive function of finance is to provide business entities with the necessary financial resources, which are used in the form of special-purpose funds. Through taxes, funds are concentrated in the state budget, which are then directed to solving national economic problems, both industrial and social, financing large intersectoral, comprehensive targeted programs - scientific, technical, economic, etc. With the help of taxes, the state redistributes part of the profits of enterprises, firms, incomes citizens, directing it to the development of industrial and social infrastructure, to investments in capital-intensive and capital-intensive industries with long payback periods.

Finances associated with the movement of the value of the social product, expressed in monetary terms, have the property of quantitatively (through financial resources and funds) reflecting the reproduction process as a whole and its various phases. This allows you to systematically control the emerging economic proportions in society, which reflects another function of finance - control.

The stimulating function of finance is manifested in the following: by maneuvering tax rates, benefits, fines, changing the conditions of taxation, introducing some and canceling other taxes, the state creates conditions for the accelerated development of certain industries and industries, contributes to solving problems that are relevant to society. With the help of taxes, benefits, sanctions, the state can stimulate technological progress, an increase in the number of jobs, capital investments in the expansion of production.

The fulfillment of the fiscal function by finances is due to the fact that with the help of taxes, a part of the income of enterprises and citizens is withdrawn for the maintenance of the state apparatus, the defense of the country and that part of the non-productive sphere, which either does not have its own sources of income (libraries, archives), or has insufficient sources. income to ensure the proper level of development (fundamental science, theaters, museums).

The concept of the financial system of the state and its structure

The totality of the financial relations of the national economy forms the financial system of the state. From the point of view of socio-economic relations, it consists of centralized, decentralized finance and household finance.

Centralized finance is the state budget system, state credit, special off-budget funds, property and personal insurance funds. They are used as a tool for regulating the national economy as a whole, solving a number of important economic and social problems.

Decentralized finance - the finance of firms and enterprises of various forms of ownership. These are financial relations between legal entities, legal entities and the state, legal entities and individuals. In their stimulating function, they are used to regulate economic and social relations within individual economic entities. The finances of firms, enterprises and sectors of the national economy form the basis of finance. Here the vast majority of financial resources are formed. The overall financial situation of the country largely depends on the state of the finances of enterprises of various forms of ownership.

In the conditions of market relations, enterprises carry out their activities on the basis of commercial calculation, in which incomes must correspond to expenses, and the main source of production and social development of teams is profit. At the expense of profit, production and social funds, funds for investment are formed. The resources of the financial market are used, among other things.

Household finances are personal finances, i.e. financial relations between individuals living together and running a common household. (Unlike a family, a household may include, in addition to relatives, also people who fully or partially contribute their share to the household budget, and also consist of one person who provides for himself financially.)

Each element of the financial system in a special way affects production, has its own inherent functions. Thus, with the help of centralized finance, resources are mobilized into the main centralized fund of the state and their distribution and redistribution between sectors of the national economy, economic regions, and individual groups of the population takes place. Extra-budgetary funds within the framework of centralized finance have a strictly targeted purpose: the largest social Pension Fund of the Russian Federation mobilizes funds for the payment of pensions to citizens of the country. Funds for property and personal insurance are intended to compensate for damage caused by natural disasters to enterprises and the population, as well as to pay material support to the insured person or his family in the event of an insured event. State credit as an element of centralized finance is a form of credit relations between the state and legal entities and individuals, in which the state acts mainly as a borrower of funds.

The finances of firms serve production. With their participation, GNP is created, distributed within firms and sectors of the national economy.

Household finances are the material basis of their life, as they imply control over future incomes and expenses within a separate economic unit of society.

Thus, each link of the financial system is a certain area of ​​financial relations, and the financial system as a whole is a set of various areas of financial relations, in the course of which funds of funds are formed and used.

From the point of view of macroeconomic analysis and the role of the state in the development of the national economy, public finances are of particular importance. The principle of their construction, characteristic of the financial systems of modern developed countries, is fiscal federalism, in which there is a clear delineation of functions between different levels of the system. In accordance with this principle, in unitary states, local budgets are not included in the state budget, in federal states, local budgets are not included in the budgets of members of the federation, and the latter are not included in the state federal budget.

As a result of the reforms carried out in the field of finance, the state finances of the Russian Federation are also built in accordance with the principle of fiscal federalism.

The budget system of the Russian Federation

Let's consider the state budget system of Russia within the framework of centralized finance.

The budget device is the organizational principles for building the budget system, its structure, the relationship of the budgets combined in it. The budget structure is determined by the state structure - in unitary states there are two levels: state and local budgets, in federal - 3 links: the federal budget, the budgets of the members of the federation and local budgets. The budgets of the lower self-government bodies do not include their income and expenses in the budgets of the higher levels.

In accordance with the Federal Law "On the Fundamentals of the Budget Structure and Budget Process in the RSFSR", the budget system of our country is a set of budgets of three levels - federal, subjects of the Federation and administrative-territorial entities. The budget system of the Russian Federation is based on economic relations and the principles of unity, completeness, reality, publicity and independence of the three budgets.

The budget system of the Russian Federation (consolidated budget) includes as independent parts:

Federal budget;

21 budgets of subjects of the federation; 55 regional and regional budgets, city budgets of Moscow and St. Petersburg; 10 district budgets of autonomous regions and the budget of the Jewish Autonomous Region;

About 29 thousand local budgets (city, district, rural).

All these budgets function autonomously, each of them has a legally defined source of income and directions for spending funds. Thus, the government is completely independent in the goals relating to the nation as a whole: defense spending, space. Local governments finance school development, public order, and so on.

The leading element of the state budget system is the state (federal) budget - the main financial plan for the formation and use of the state's centralized monetary fund. It is with its help that the state carries out mainly territorial and intersectoral distribution and redistribution of the gross national product (up to 40% of the national income).

The main revenues of the state budget are taxes and non-tax payments. The state budget in the Russian Federation (as well as in countries with a developed market economy) is assigned the main taxes - corporate income tax, excises, VAT, customs duties. Tax revenues of the state budget also include fines and penalties paid for violation of tax legislation. Non-tax revenues include both mandatory payments: income from the use of federally owned property, income from the sale of state-owned property, income from the sale of state reserves, income from foreign economic activity, as well as fines, the collection of which is not related to tax legislation, income from the sale of confiscated goods, etc.

In accordance with the Constitution and laws of the Russian Federation, the revenue side of territorial budgets should consist of fixed and regulatory revenues, subsidies and subventions, and credit resources.

Fixed incomes go entirely to the relevant budgets (the tax of the subject of the Federation is the property tax of enterprises; local taxes; tax on the property of individuals; land tax, etc.).

Regulatory revenues are funds transferred from a higher budget to a lower one, in excess of the fixed revenues to cover its expenses, based on the size of interest deductions.

Grants are fixed amounts transferred by higher budgets to lower ones to replenish revenues and minimize the budget deficit.

Subventions are strictly earmarked funds, which are also transferred to lower budgets.

Credit resources - funds transferred on a reimbursable basis with or without interest.

The functions of drawing up and executing budgets are assigned to the executive authorities. The legislature is responsible for reviewing and approving the budget. In accordance with the laws, the government of the Russian Federation adopts a resolution on the development of the budget system for the coming financial year (in Russia it is a calendar year). Next, work is organized to draw up a draft budget: socio-economic development is forecast, the main development indicators are worked out and agreed upon.

State budget of the Russian Federation, its expenses and revenues

The main link of the Russian budgetary system is the Federal budget of the Russian Federation. It accumulates the bulk of the resources of the country's budget system. The centralization of funds in the federal budget makes it possible to maneuver resources, direct them to the defining areas of economic and social development, and implement a unified socio-economic policy in the country.

During the transition to a market economy, state budget funds should be directed primarily to financing the structural restructuring of the economy, the implementation of targeted programs, and social protection of the least well-off strata of the population.

Given the current situation in our country, it should be noted the tasks that the Russian budget performs at this stage of economic development:

Overcoming the consequences of the financial crisis, maintaining the standard of living of the population and ensuring the functioning of the real sector of the economy;

Ending the economic recession and ensuring economic growth;

Stabilization of the monetary system and the ruble exchange rate;

Reducing the tax burden, creating favorable conditions for industrial investment, increasing the level of tax collection;

Implementation of the restructuring of the state debt of the Russian Federation;

Minimization of government borrowings of the Russian Federation in the financial markets and reduction of the state budget deficit;

Reducing non-payments, reducing unreliable forms of payment, including using barter;

Full-scale transition to the treasury system of execution of the federal budget, transition to this system of execution of the budgets of the constituent entities of the Russian Federation, local budgets, budgets of state extra-budgetary funds;

Full fulfillment by the state of its obligations. The budget of the Russian Federation as the main financial

The plan of the state is based on the indicators of the forecast of the socio-economic development of the country for the next year. General indicators and the structure of incomes and expenses are associated with the volume of social production and are determined by the tax system and the economic policy of the state.

The state budget is interconnected with the financial plans of enterprises and organizations, monetary incomes and expenditures of the population.

Federal budget revenues are formed from:

Tax on profit (income) of enterprises and organizations - at established rates in accordance with the legislation of the Russian Federation;

Personal income tax;

Tax on gambling business;

VAT on goods produced in the territory of the Russian Federation;

VAT on goods imported into the territory of the Russian Federation;

Excises on oil, natural gas, cars, motor gasoline, ethyl alcohol;

Licensing and registration fees;

Tax on the purchase of foreign banknotes and payment documents denominated in foreign currency;

A single tax on imputed income for certain types of activities;

Tax on operations with securities;

Payments for the use of subsoil;

Payments for the use of the forest fund;

Fees for the use of water bodies;

Land tax and rent for land of cities, towns and agricultural land in parts accumulated in the federal budget to finance centralized activities;

Payments for standard and excess emissions and discharges of harmful substances;

Customs duties and customs fees and other customs payments, income from foreign economic activity;

State duty;

Dividends on shares owned by the federal government;

Profits of the Central Bank of the Russian Federation;

Consular fee levied on the territory of the Russian Federation;

Other taxes, fees, duties and other payments.

Tax revenues will amount to 84% of the Federal budget, non-tax revenues - 7%, incomes of target budget funds - 9%.

Non-tax revenues consist of income from foreign economic activity, as well as income from state-owned property: transfer of profits of the Central Bank of the Russian Federation, dividends on shares owned by the state, income from leasing state-owned property, consular fees, income from conducting all-Russian state lotteries.

Budget expenditures of the Russian Federation include the following main cost groups:

Public administration;

International activity;

National Defense;

Law enforcement and state security;

federal judiciary;

Basic research;

Industry, energy, construction;

Agriculture and fishing;

Education;

Culture and art;

Mass media;

Health care and physical culture;

Social politics;

Servicing the public debt;

Financial assistance to the constituent entities of the Russian Federation and closed administrative-territorial entities;

Other expenses.

Republican (budgets of subjects of the federation) and local budgets have their own sources of funds and directions for spending.

Secondary taxes (mainly property taxes) are assigned to the republican and local budgets. In these budgets, in comparison with the state budget, a higher proportion of funds is directed to social needs.

Thus, the revenues and expenditures of the budgets of the republics within the Russian Federation and local budgets do not repeat the revenues and expenditures of the federal budget. In addition, the budgets of the subjects of the federation and local budgets receive the funds they need through subsidies and loans from the state budget and the issuance of local loans guaranteed by the government, as well as by transferring to the revenue part of these budgets (on a legislative basis) a certain share of revenues from a number of federal taxes.

Obviously, the main problem of the effective use of the principle of fiscal federalism in the formation of the financial system of the state is to determine the optimal amount of financial resources going to the federal budget, on the one hand, and to regional and local budgets, on the other.

Extra-budgetary funds play an important role in the structure of centralized finance. In countries with developed market economies, the largest off-budget funds are the national insurance funds, which are formed from the insurance premiums of employees of enterprises, entrepreneurs and subsidies from the state budget. The funds from these funds are used to pay pensions for old age, disability, in case of loss of a breadwinner, benefits for temporary disability, unemployment.

Within the framework of the Russian financial system, there are currently more than 30 off-budget funds for social and industrial purposes. All off-budget funds have a strictly targeted purpose: to expand social services to the population, stimulate the development of backward infrastructure sectors, and provide additional resources for priority sectors of the economy.

In accordance with the Decree of the President, in order to strengthen control over the spending of state financial resources in the republican budget of the Russian Federation, all state targeted budget funds, the income of which is formed from mandatory payments by firms, enterprises, institutions, organizations, with the exception of the Pension Fund, Social Fund insurance and the Compulsory Medical Insurance Fund, while maintaining the target orientation of the consolidated funds. These funds include: the Federal Road Fund, the Fund for the Development of the Customs System of the Russian Federation, the Interdepartmental Fund for the Development of the Tax System and the Tax Service of the Russian Federation, the State Fund for Combating Crime, and the Federal Environmental Fund of the Russian Federation.

One of the links in the financial system of the state is the state credit. The main form of economic relations within the framework of a state loan is a situation where the state acts as a borrower of funds. Less often, it acts as a creditor, providing loans to legal entities and individuals. In cases where the state assumes responsibility for the repayment of loans or the fulfillment of other obligations assumed by individuals and legal entities, it is a guarantor.

As an economic category, public credit is at the junction of two types of monetary relations: finance and credit, and bears the features of both. As a link in the financial system, it serves the formation and use of the centralized monetary funds of the state, i.e. the state budget and off-budget funds of all levels.

State credit performs two functions: fiscal and regulatory. Through the fiscal function of the state credit, the formation of centralized monetary funds of the state is carried out. In countries with developed market economies, loans are the main source of financing the budget deficit.

The placement of new government loans to pay off debt already issued is called "refinancing the government debt."

Government loans are classified:

By subjects of loan relations: placed by central and local governments;

Depending on the location: internal and external;

Depending on circulation on the stock market: market, which are freely sold and bought, and non-market, which are not subject to circulation on the securities market;

Depending on the maturity: short-term (maturity up to a year), medium-term (from 1 to 5 years) and long-term (over 5 years);

By the nature of the debt to be repaid: winning (based on a lottery), interest-bearing and zero-coupon. With a zero coupon, short-term government securities are usually issued; they are sold at a discount, i.e. below cost, but redeemed at face value

1. ESSENCE OF FINANCE
Finance is a historical category. They appeared simultaneously with the emergence of the state during the stratification of society into classes. The term finansia originated in the 13th-15th centuries. in the trading cities of Italy and denoted any cash payment. Later, the term gained international distribution and began to be used as a concept associated with the system of monetary relations between the population and the state regarding the formation of state funds of funds. Thus, this term reflected, firstly, monetary relations between two subjects, i.e. money acted as the material basis for the existence and functioning of finance (where there is no money, there can be no finance); secondly, the subjects had different rights in the process of these relations: one of them (the state) had special powers; thirdly, in the process of these relations, a nationwide fund of funds was formed - the budget (hence, we can say that these relations were of a stock nature); fourthly, the regular flow of funds to the budget could not be ensured without giving taxes, fees and other payments of a state-compulsory nature, which was achieved through the legal rule-making activities of the state, the creation of an appropriate fiscal apparatus.
These are the main features of finance. According to them, one can unmistakably single out finance from the totality of monetary relations. For example, monetary relations that arise between citizens and retail trade (even under the conditions of state regulation of retail prices) cannot be attributed to finance, since the state here regulates monetary relations using the civil law method, for which the characteristic feature is the equality of subjects (the equality of their rights and duties) united by these relations.

Thus, finance is always a monetary relationship, but not any monetary relationship is always a financial relationship.
Based on the foregoing, we can formulate a general definition of finance.
Finances are economic relations associated with the formation, distribution and use of centralized and decentralized funds of funds in order to perform the functions and tasks of the state and ensure conditions for expanded reproduction.

Finance as a scientific concept is usually associated with those processes that appear on the surface of social life in various forms and are necessarily accompanied by the movement (cash or non-cash) of funds. Whether we are talking about the distribution of profits and the formation of funds for on-farm purposes at enterprises, or the transfer of tax payments to state budget revenues, or the contribution of funds to extra-budgetary or charitable funds - in all these and similar financial transactions, there is a movement of funds.
Being very conspicuous, cash flow in itself does not reveal the essence of finance. To comprehend it, it is necessary to identify those common properties that characterize the internal nature of all financial phenomena - they are united by the underlying relations between the various participants in social production, or social relations. By nature, these relations are production (economic), since they arise directly in social production.
Economic relations are exceptionally diverse: they arise at all stages of the reproduction process, at all levels of management, in all spheres of social activity. At the same time, homogeneous economic relations that characterize one of the aspects of social life, being presented in a generalized abstract form, form an economic category. Finance, expressing the production relations that actually exist in society, which have an objective character and a specific social purpose, act as an economic category.

The financial system includes three main links: public finance, household finance and enterprise finance. Of these three links, the finances of enterprises are the main one, because the first two links are formed on their basis.
Public finances consist of two main elements: the state budget and off-budget funds.
The state budget is the annual plan of state revenues and expenditures, it is money that allows the state to perform economic and social functions (and, more recently, political ones). The state budget consists of the government budget and local budgets (regions, cities, districts, village councils). Therefore, the approval of state budgets for the next year is always stormy. Governments are trying to infringe on the rights of the regions, and the latter are trying to leave more funds at their disposal.
Extra-budgetary funds are those funds that are accumulated outside the state budget system and have a strictly designated purpose: a pension fund, a social insurance fund, etc.
The budget consists of two parts: revenue and expenditure. In countries with developed market economies, 80-90% of the budget revenue is formed from taxes on enterprises and the population.
The rest comes from the use of state property, foreign economic activity. The structure of the expenditure part of the budget includes expenditures on social and cultural needs (health care, education, social benefits, etc.), expenditures on the development of the national economy, defense, and public administration.
In a socially oriented economy, taxation is based on the principles of obligation to pay, social justice and links with the receipt of benefits.

Thus, financial relations cover two areas:
A) economic monetary relations associated with the formation and use of monetary funds accumulated in the state budget system and government off-budget funds;
B) economic monetary relations that mediate the circulation of decentralized monetary funds of enterprises.

The monetary nature of financial relations is an important feature of finance. Money is a prerequisite for the existence of finance. If there is no money, there can be no finance either, because the latter is a social form conditioned by the existence of the former.
In this regard, it is unlawful to attribute to finance not only monetary, but also natural relationships. The existence of duties in kind in the era of feudalism, the collection of tribute by the slave-owning state from its citizens and conquered peoples, the naturalization of social relations under conditions of disordered monetary circulation does not at all prove the natural nature of financial relationships. They say something else - the functioning of finance is possible only under certain conditions, the absence of which immediately narrows the boundaries of this category.
The emergence of financial relations always makes itself felt by real cash flow. The absence of such movement at the stages of production and consumption of the reproductive process indicates that they are not the place where finance originated.
The real movement of funds occurs at the second from the third stage of the reproduction process - in distribution and exchange. However, the nature of the movement of value (in its monetary form) at these stages is different, which does not allow both sides to be attributed to the sphere of functioning of finance.
At the second stage, the movement of value in monetary form is carried out separately from the movement of goods and is characterized by its alienation (transfer from the hands of some owners to the hands of others) or the targeted isolation of each part of the value (within one owner). At the third stage, the distributed value (in monetary form) is exchanged for a commodity form, i.e. purchases and sales are made. There is no alienation of value itself here; it only changes its form - from monetary to commodity.
At the third stage of the reproduction process, exchange operations that are constantly performed are served by two categories: firstly, money as a universal equivalent, and secondly, price. No other public instrument is needed here anymore. Therefore, there is no place for finance in exchange.

The area of ​​origin and functioning of finance is the second stage of the reproduction process, where the value of the social product is distributed according to its intended purpose and business entities. Therefore, an important feature of finance as an economic category is the distributive nature of financial relations.
The distribution and redistribution of value with the help of finance is necessarily accompanied by the movement of funds, which take a specific form of financial resources; they are formed by business entities and the state at the expense of various types of cash income, deductions and receipts, and are used for expanded reproduction, material incentives for workers, satisfaction of social and other needs of society. Financial resources act as material carriers of financial relations. The fact that financial resources belong to a specific business entity and the state allows them to be separated from the population's funds and, in particular, to draw a line between finance and wages.

The use of financial resources is carried out mainly through special-purpose funds, although a non-fund form of their use is also possible. Financial funds are an important component of the general system of monetary funds, functioning in the national economy. The stock form of the use of financial resources is objectively predetermined by the needs of expanded reproduction and has some advantages over the non-stock form: it allows you to more closely link people's needs with the economic capabilities of society; ensures the concentration of resources in the main directions of development of social production; makes it possible to more fully link social, collective and personal interests and thus more actively influence production.

The most important feature of finance is that financial relations are always associated with the formation of cash income and savings, which take the form of financial resources.

2. FUNCTIONS OF FINANCE.
Finance is an integral part of monetary relations, therefore their role and significance depend on the place monetary relations occupy in economic relations. However, finance differs from money not only in content, but also in the functions performed, in which their essence is manifested. Functions refers to the “work” that finances perform.
No one denies that finance is a set of monetary relations organized by the state, in the process of which the formation and use of funds of funds is carried out. And to the question of what is the source of the formation of numerous funds at different levels, the answer, as a rule, is the same - the gross domestic product. It is possible to carry out the process of distributing GDP with the help of financial instruments: norms, rates, tariffs, deductions, etc., established by the state.
If we talk about finance in general, then, apparently, it should be considered that they perform two main functions: distributive and control. That part of finance that functions in the sphere of material production and participates in the process of creating cash income and savings, performs not only distribution and control, but also the function of generating cash income (regulating).

With the help of finance, the state distributes the social product not only in kind-monetary form, but also in value. In this regard, it becomes possible and necessary to control the provision of cost and natural-material proportions in the process of expanded production.
Actively participating in the distribution and redistribution of national income, finance contributes to the transformation of the proportions that have arisen during the initial distribution of national income into the proportion of its use. The ultimate goal of the distribution and redistribution of national income and gross domestic product, carried out with the help of finance, is to develop productive forces, create market structures for the economy, strengthen the state, and ensure a high quality of life for the general population.
The control function of finance is closely connected with the distributive one - it is, first of all, control over the ruble in the process of objectively existing monetary relations. It permeates the entire system of relations associated with both the movement of value and the change in forms of value, and represents value control through the form of ownership. Since finances express relations that arise on the basis of real money turnover, control over the ruble as a function of finances is only control over real money turnover.
Finance exercises control at all stages of the creation, distribution and use of the social product and national income. Their control function is manifested in all the variety of economic activities of enterprises. The ruble is controlled by production and non-production costs, the correspondence of these costs to income, the formation and use of fixed assets and working capital. It operates at all stages of the circulation of funds, in financing and lending, conducting cashless payments, in relations with the budget and other parts of the financial system.
The object of the control function of finance is the financial performance of enterprises, organizations, institutions.
One of the important tasks of financial control is to verify the exact observance of legislation on financial matters, the timeliness and completeness of the fulfillment of financial obligations to the budget system, the tax service, banks, as well as the mutual obligations of enterprises and organizations for settlements and payments.

The regulatory function is associated with state intervention through finances (government spending, taxes, loans) in the reproduction process. In order to regulate the economy and social relations, financial and budget planning, state regulation of the securities market are also used.
Although finance is in the basic category, it largely depends on government policies.

3. INTERCONNECTIVITY OF FINANCE
Finance, participating in the distribution and redistribution of the gross social product and national income, interacts with other cost (monetary) categories of distribution - price, credit, wages, insurance. These monetary categories also participate in the distribution process, as well as in other stages of the reproduction cycle. However, the extent and forms of their participation are not the same. Each of these categories occupies its own special place in the system of distribution and other reproduction relations, participating in the methods and methods inherent only to it in a single process of distribution of the social product and national income.
The price acts as the initial category of value distribution, mediating the transition of the product of labor from the natural-material form to the monetary form, and its movement from one owner to another on the basis of acts of sale. In the process of distribution, price deviations from the value determined by the socially necessary expenditure of labor may occur, as a result of which some producers realize more value, while others realize less. In this case, finances enter the redistribution process with their own methods: they withdraw part of the value (for example, with the help of excise taxes, export or import taxes, customs duties) or transfer the lost part of the value through subventions (subsidies), budgetary or sectoral financing. It should be borne in mind that the deviation of prices from value can be deliberately set by the state when pursuing a price policy (regulated prices, socially low prices, prices determined by high demand - monopoly prices). In market conditions, free prices, formed by the demand and supply of goods and services, prevail.
However, the action of the price does not cause the direct formation of funds, it acts as an instrument of commodity production and circulation. The act of exchange is both a sale (for the one) and a purchase (for the other). In case of non-equivalent sale of goods, the share of “m” decreases or increases, and in case of non-equivalent purchase, the volume and proportion of “c” and “v” of the new product change. The price affects the size and structure of the compensation fund, and hence the profit.
With the help of finance, the distribution process initiated by the price is corrected, taking into account the conditions for the movement of value, set by economic plans and proportions. If with the help of prices the proceeds from the sale of products are formed as a whole, then the financial distribution splits this proceeds into trust funds of funds intended for further use. Thus, financial distribution methods are more flexible, they provide greater targeting in this process. The degree of breadth of distribution is different: if the price distributes only a part of the value in the form of its deviation from socially necessary costs or the deviation of the latter from individual costs, then finance redistributes the entire value of the product.
A special role is played by the price in determining the amount of depreciation. The gap between the original and current prices of the means of production causes
significant fluctuations in the depreciation fund. The price distortion of value embedded in production (based on non-equivalent purchases) is enhanced by non-equivalent sales and causes an increase in redistributive relations at the stages of distribution and consumption.
Finance is closely related to wages. The wage fund (wage fund) in the sphere of material production is separated from the proceeds from the sale of products with the help of finance. This fund can be formed depending on the volume of products produced. In the case of using the category of income in economic practice, the payroll fund is formed in closer connection with the achieved financial results. Gross income* as the difference between the income from sales of products and the cost includes savings on costs and therefore is characterized as a complex financial concept that combines in monetary terms all the efforts of the economic agency in terms of quantitative and qualitative results of activities. There is also a price factor here: in the case of the sale of high-quality products, both the savings in material costs and the relative savings in the use of fixed capital, acting in the form of a decrease in the share of depreciation deductions attributable to a larger quantitative volume of products, increase profit or income.
Outwardly, it seems that the price factor is not directly involved in determining the wage fund. But through the distribution of net income, its influence is obvious. In a market system, the effect of price on the wage bill is even greater.
In the non-production sphere, the relationship between finance and wages is especially clear, since the wage fund for workers in this area is formed largely from budget funds and is determined by the financial capabilities of the corresponding budget.
In all cases, wages, as an economic category, determine the conformity of the share of each worker in the created product, that is, the boundaries of the participation of workers in the distribution,
and finances form the wage fund or wage fund.
It uses wages at the stage of consumption, that is, by paying for goods and services. At the same time, a certain part of it is mobilized by financial methods in the form of taxes paid by the population, insurance premiums: by the credit method - in the form of deposits in banks, government bonds; by acquiring shares and other securities, holding lotteries.
At the same time, the spheres of action and motives for the action of the categories under consideration differ significantly. The effect of finance is wider than wages, since finances distribute the entire social product, while wages only distribute the necessary product and part of the surplus. Payment for labor is associated with the action of one of the most important factors of production - labor, serves as a means of compensating for the labor expended, and finance, in addition, with the means of production, through their direct formation. Remuneration of labor stimulates the growth of its productivity, and finance affects all social production, activating its development through the system of the financial mechanism.
The interaction of finance with credit is manifested very closely. As in finance, in credit relations, monetary funds, called loan funds, are formed and used for the purposes of long-term and short-term lending to business entities, the population, and the state.
Both categories are designed to create conditions for a normal, uninterrupted circulation of funds in the public economy. The objects of the complex impact of these categories in the sphere of material production are production assets (capital). Finance and credit are the sources of formation of capital investments and working capital. Financial methods, as a rule, satisfy the constant needs of economic agencies in cash, credit - temporary needs. In the future, the role of credit resources as a source of capital investments will increase.
The expansion of credit methods creates additional incentives for a more efficient use of financial resources, puts their spending under the constant control of banks, which increases the self-supporting responsibility of economic entities for the results of production and financial activities. Non-refundable funding should be reduced.
The relationship between finance and credit is clearly seen in the processes of formation of financial and credit resources, where the action of both categories is mutually directed: with the help of finance, credit resources of banks are formed - funds of economic agencies, depreciation deductions, part of the proceeds from the sale of products to replenish working capital, which is not immediately directed to the acquisition material resources and other means. With the help of a loan, financial resources are formed: loans replenish the financial resources of economic agencies - until the moment of repayment; bank payments to the budget from income based on the results of their activities and in a number of other cases; possible budget borrowings from banks to finance government spending.
Thus, a certain interchangeability of both categories is traced in meeting the needs of expanded reproduction.
However, there are certain differences between the categories under consideration. If finance distributes and redistributes the social product, then credit participates only in redistribution, continuing the distribution begun by finance. The object of the loan is only that part of the cost that is currently temporarily free, which allows it to be accumulated in the loan fund to meet the needs of economic agencies and the population in need of funds.
A significant difference is the method of using the accumulated funds: financing involves the direction of funds in a gratuitous and indefinite manner, and lending - on the terms of repayment, urgency, payment; The most important principle of credit is the material security of loans issued.
Finance is closely related to the settlement system, since their functioning is based on mutual settlements between individual business entities. Calculations are not an economic category, they are a tool for implementing the mentioned categories. In this case, the function of money as a means of circulation and a means of payment is used. The timely execution of financial transactions, the formation of trust funds, and the unhindered advancement of financial resources in the necessary areas depend on the clarity and smoothness of calculations.
Settlements of economic entities in the sphere of material production for manufactured products, goods and services precede the action of finance and contribute to the subsequent implementation of financial relations. Specific indicators characterizing the state of settlements in the sphere of material production are receivables and payables. The level of this debt affects the financial condition of economic agencies and depends on the state of contractual discipline, the solvency of consumers. The state of settlements in the national economy is currently unsatisfactory: the amounts of non-payments on mutual settlements between economic entities and overdue debts on bank loans and wages are increasing. Failure to comply with contractual obligations is a factor of financial instability and leads to unproductive costs and loss of funds in the form of fines. This is a direct deduction from income and ultimately from the wage fund. Cash settlements are an important link in the implementation of commercial settlement and self-financing. Their normal functioning is an indispensable condition for the reproduction process and the operation of cost economic categories - price, finance, credit, wages.

4. THE ROLE OF FINANCE AT THE PRESENT STAGE OF RK.

At present, the shortcomings of the financial policy, holding back the economic and social development of our country, have become especially acute. These include: the dogmatic (non-creative) nature of the financial policy, its inability to quickly respond to the changing conditions of the development of our state, to find the necessary ways to solve pressing problems; lack of strategic conceptual developments; carrying out partial unreasonable tactical measures focused on momentary gain; separation of financial policy from the actual state of affairs in the national economy; violation of the most important requirement of proper financial management - to live within one's means; residual approach in determining the financial basis for meeting the social needs of citizens.
The purpose of the concept of financial policy, developed in modern conditions, is to achieve a higher standard of living for the people on the basis of the development of the economy, the all-round increase in the efficiency of social production. The social orientation of the financial strategy is manifested not only in finding opportunities to increase financial resources directed to improving the welfare of the people, but also in a fundamentally new approach to the main goal of economic policy. The standard of living now acts as a quantity that determines the development of production, the direction and structure of the use of financial resources.
Of great importance for the recovery of the economy and the expansion of the country's financial capabilities on this basis is the attraction of foreign investment into its economy. They can be carried out in various forms. World experience proves the enormous effectiveness of foreign direct investment.
Satisfaction of certain needs is provided only subject to the availability of financial resources. This means that the financial policy is developed and carried out taking into account real financial possibilities. Expenses can only grow if financial resources increase. At the same time, the focus is shifting from subsidizing consumption to financing production. All economic and financial policy measures are aimed at enabling the population to increase their income, on the one hand, and creating favorable conditions for the development of entrepreneurial activity, on the other.
In accordance with the cardinal changes in financial policy, the financial mechanism is being rebuilt. The purpose of restructuring the financial mechanism is to increase its impact on the efficiency of social production through the development of market relations, to ensure an increase in the efficiency of the use of financial resources. The restructuring of the financial mechanism is based on fundamentally new approaches to the organization of financial interrelations in the national economy, which ensure the comprehensive development of economic initiative and the responsibility of enterprises, organizations, and regions of the country for the final results of work.
In a market economy, there is no need to use special financial methods to increase the interest of enterprises in the best use of production factors, to strictly regulate their financial activities. Market competition forces enterprises to constantly take care of production efficiency, improve the quality of financial planning, and deepen internal financial control over the use of financial resources. At the same time, the importance of financial regulation of market relations by the state is increasing. It is carried out by taxing the profits of enterprises (through changes in rates, tax incentives, differentiation of objects of taxation), the introduction of additional taxes (for example, export and import tax, tax on other income, VAT), taxation of workers' income, financing targeted programs. The system of financial sanctions for violation of business contracts, quality
parameters of manufactured products, for non-compliance with the requirements for environmental protection, sanitary norms and rules. The state strengthens sanctions for untimely and incomplete fulfillment of financial obligations to the budget and extra-budgetary funds, concealment of profits and other objects of taxation. Widespread development receives audit financial control.
In order to improve social services for the population, a new economic mechanism has been introduced in institutions and organizations in the social sphere. Financing of their needs from the budget is carried out on the basis of long-term stable standards, determined on the basis of social spending per inhabitant or other indicators. Institutions of the social sphere have been granted the right to provide paid services, engage in economic activities, and independently dispose of the income received.
Fundamental changes have been made to the mechanism of public finance. The formation of state budget revenues has been transferred to a tax basis; Fundamentally changed the structure of budget expenditures and the system of budget financing. The system of off-budget funds has become widespread.
The development of market relations, the improvement of management methods have led to positive results in the field of organization and management of property and personal insurance: cooperative insurance is developing, joint-stock insurance companies are emerging; new types of insurance are introduced; the ratio between compulsory and voluntary forms of insurance is changing. Improvement of the insurance mechanism is aimed at providing quality services to policyholders and increasing the efficiency of the insurance business.

CONCLUSION.
As shown, the role of finance in the effective operation of the state economy is enormous. The role of the state in the full functioning of finance and the financial system is great. The study and disclosure of the essence of finance allows you to know where and for what the taxes withdrawn from enterprises and citizens are used, what are the causes and consequences of the budget deficit and how to overcome them, why do we need stock exchanges, whether unprofitable enterprises should be subsidized or it is worth carrying out bankruptcy proceedings. It should continue to study the essence of finance and their interaction with other segments of the economy.
The presence of controversial issues necessitates further development of theoretical problems of the essence of finance. A deeper knowledge of the economic nature of finance, their inherent properties will allow us to actively develop ways to better use this category in business practice, scientifically substantiate measures aimed at financial recovery of the economy and improvement of financial relationships in our country.
The clear functioning of the financial system of the state depends on understanding the essence of finance. The coherence of the work of all its links and subsystems. In addition, a good knowledge of the financial sphere of activity is necessary for our country because it is currently experiencing a deep economic and financial crisis. Without a well-functioning financial system, it is impossible to improve the economy and develop internal and external financial ties. It is necessary to improve the financial system for its more accurate functioning.
It is important to emphasize here that the problems of financial recovery are now worrying literally everyone. After all, what is currently happening in the financial sector is closely related to the personal well-being of everyone. The amount of profit and taxes, contributions to social insurance and pensions, the price of shares and bonds, forms of investment in production and the social sphere, etc. - such issues are being discussed today not only in government circles; they deeply concern each of us.

The concept and essence of finance.

Composition of finance.

Functions of finance.

The role of finance in the economic development of society.

1. The concept and essence of finance

Finance- a system of economic relations associated with the formation, distribution and use of monetary funds in order to fulfill the functions and tasks of the state and ensure conditions for expanded reproduction in the country's economy.

Finance, expressing the production relations that really exist in society, which have an objective character and a specific social purpose, act in as an economic category. The peculiarity of the relations that make up the content of finance as an economic category lies in the fact that they always have a monetary form of expression.

Finance is an objective, historically established economic category that arose with the development of commodity-money relations and the emergence of the state.

Thus, finance began to express economic relations in connection with the formation, distribution and use of funds of funds in the process of distribution and redistribution of national income at all levels of management.

The area of ​​origin and functioning of finance is the stage of the reproduction process at which the value of the social product is distributed according to the intended purpose and business entities, each of which must receive its share in the product produced. Therefore, an important feature of finance as an economic category is the distributive nature of financial relations.

Financial relations cover two spheres:

economic monetary relations associated with the formation and use of centralized state monetary funds accumulated in the state budget system and state off-budget funds;

economic monetary relations mediating the circulation of decentralized monetary funds of enterprises and the population.

Finance, participating in the value distribution, are closely related and interact with such economic categories like price, salary, credit.

2. Composition of finance

AT composition of finance includes:

a) public finance;

b) finances of business entities: enterprises and population;

c) the financial market.

G public finance include:

the state budget;

local budgets;

state credit;

state insurance system;

off-budget funds;

finances of state enterprises.

State finances, and, above all, the budget system, through the appropriate allocation of funds, must ensure compliance with the basic proportions in the economy, increase production efficiency, accelerate scientific and technological progress, and on this basis, increase the living standards of the population.

Finances of business entities include:

finance enterprises of various forms of ownership, which form the basis of finance. Here the predominant part of financial resources is formed;

finances of the population - relations regarding the formation and distribution of the family budget and the implementation of savings.

Financial market ensures the redistribution of financial resources in the economy between owners and users using the market mechanism.

At the same time, the specificity of financial markets gives rise to specific forms of financial relations:

credit- relations regarding the provision of values ​​in commodity or monetary form by some economic entities to others on the terms of urgency, payment, repayment;

insurance- relations regarding the formation by economic entities of funds, the purpose of which is to compensate for losses arising from adverse events;

There are the following types of financial markets:

money market;

currency market;

stocks and bods market;

bank loan market;

insurance market.

The distribution and redistribution of value with the help of finance is necessarily accompanied by the movement of funds, which take a specific form of financial resources.

Financial resources- cash, serving as sources of formation of cash funds.

Part state financial resources includes:

tax revenues;

non-tax revenues;

contributions to off-budget funds;

funds raised in the financial market.

Financial resources of enterprises generated from own and borrowed funds.

To own funds include:

statutory fund (contributions of participants);

depreciation charges (for state-owned enterprises);

To involved funds include:

Bank loan;

commercial credit;

bond loans;

arrears in accruals (wages and tax liabilities);

other borrowed funds.

Financial resources of the population consist of:

operating income;

property income;

savings income.

The use of financial resources is carried out mainly through cash funds special purpose, although a non-stock form of their use is also possible.

The formation of monetary funds takes place in a decentralized manner, and their use - in a centralized manner.

The purpose of the formation of state monetary funds is to ensure the fulfillment of its functions: management, provision of social services, social security, implementation of state programs.

Enterprises create funds to ensure the continuity of the production process and its expansion.

The monetary funds of the population are used to meet current needs, provide for disabled people, and provide for family members.

3. Functions of finance

The essence of finance is manifested in their functions.

There are three finance functions :

Accumulating, which manifests itself in the formation of cash income and funds.

Monetary incomes and monetary funds are formed in the process of creation, distribution and use of the national income. This process has specific goals and objectives: ensuring the continuity of the production process and its expansion; solution of social issues; implementation of environmental programs and others.

By using distribution function is carried out primary, but mainly secondary distribution of GDP and national income in society.

The redistribution of national income is carried out in connection with:

intersectoral and territorial redistribution of funds;

the presence of various social groups of the population;

the presence of industrial and non-industrial spheres;

having different forms of ownership.

Control the function is manifested in the organization of control over the formation and use of monetary funds. Its necessity follows from the distinction between the right of ownership and the right to dispose of property in economic life.

Control is necessary both at the stage of formation of funds, and at the stage of their use. At the same time, in the process of formation of monetary funds, control is exercised over the correct and timely receipt of income from all funds (revenue, taxes, wages, interest on loans, etc.) and their distribution. When using funds from funds, the targeted nature of this use is controlled.

The tool for implementing the control function is financial information, which is contained in accounting, financial and statistical reporting.

The degree and depth of implementation of the control function is largely determined by the state financial discipline in the country - obligatory for all subjects of the economy by the procedure for carrying out business operations, established norms and rules of management, and the fulfillment of financial obligations.

4. The role of finance in the economic development of society

The objective prerequisites for the purposeful use of finance in social production lie in the functions of this category.

Potentially, finance has a large opportunities to influence the economy. This is due to two circumstances. Firstly, with the fact that, being a category of distribution, finance serves the reproductive process as a whole; their sphere of influence is not limited to the area of ​​value distribution, but also extends to other stages of reproduction. And, secondly, with the fact that finance has the potential property of a catalyst for economic processes, arising from their distributive nature.

Distribution, carried out by the financial method, begins in the sphere of material production. The stage of distribution is closely connected with production and directly depends on it, since only what is actually created in production can be distributed.

Functioning in the sphere of material production, finance serves the circulation of production assets and participates in the creation of new value; thanks to them, the realized value is distributed and incomes, savings and deductions are formed; on their basis, earmarked funds are formed, intended to meet various social needs.

As an economic tool of management, finance is able to quantitatively and qualitatively influence social production.

Capabilities quantitative impact for social production are determined by the volume of mobilized and distributed financial resources. It is the amount of financial resources and the direction of their use that can affect the proportions of distribution between enterprises and industries of additional means of production (under the condition of wholesale trade in them), the level of technical equipment of the enterprise, etc. By changing the amount of financial resources left at the disposal of business entities, establishing the most effective investment directions, achieving the distribution of financial resources in accordance with the declared priorities, society can influence the development of production in the desired direction.

Qualitative Impact Finance depends on the possibilities of influencing the material interests of the participants in the reproduction process, which this or that specific form of financial relations has. The qualitative impact is associated with the transformation of finance into an incentive for economic development. Such a transformation occurs if the procedure for the formation of financial resources, the conditions, principles and methods for the formation of monetary funds, the directions of their use can be organically linked with the economic interests of various business entities.

Within the framework of the use of finance in social reproduction, there are three main directions of financial impact on the processes of social development:

financial support for the needs of expanded reproduction;

financial regulation of economic and social processes;

financial incentives for better performance.

The use of finance in social reproduction is accompanied by obtaining certain results, in which the role of this category is clearly manifested. The role of finance can be different depending on changes in the real conditions of their functioning, directions of influence on social production, linkages with other distribution categories, etc. But with the difference in the results obtained when using finance in different historical periods, one thing remains unchanged - the ability to influence the processes of social development with the help of finance.

test questions

How do you understand the term "finance"?

Name the prerequisites for the emergence of finance as specific economic relations and illustrate their impact.

Compare the two terms "money" and "finance". What are their differences?

Identify and justify which of the following relationships relate to financial:

Purchasing food by a family member;

Adoption of a decision by the joint-stock company on a new issue of shares;

Payment by the enterprise of the supplier's invoice;

Family budget planning on the eve of vacation;

Formation of a production development fund by the enterprise;

Purchase of equipment at the expense of the production development fund;

Introduction by the state of subsidizing the cost of housing and communal services at the expense of the state budget.

What is the composition of finance? Illustrate the interaction of individual elements of finance on the principle of a circular flow of products and income.

What are financial resources? What is their structure for various participants in financial relations?

Illustrate the interaction of the category "finance" with such economic categories as "salary", "credit", "price".

Describe the functions of finance. How are they implemented?

What are the objective prerequisites for the use of finance in social production?

What is the quantitative and qualitative aspects of the influence of finance on social production?

What are the main directions of the impact of finance on social production?

Finance / V.M. Radionova, Yu.Ya.Vavilov, L.I. Goncharenko and others; Under. ed. V.M. Rodionova. - M.: Finance and statistics, 1995. - 432 p.

Finance: Textbook for universities / Under. ed. prof. L.A. Drobozina. -M.: UNITI, 2000. - 527 p.

B.M. Sabatini. Theory of Finance: Textbook, 2 - ed. - M .: Publishing house "Manager", 2000. - 192 p.

Topic 16. Finance and financial system

16.1. Essence and functions of finance

16.2. The financial system, its elements and their relationship

Finance is a historical category, since it has stages of origin and development. They appeared simultaneously with the emergence of the state and changed along with it. Therefore, the essence of finance, the laws of their development, the scope and role in the process of social reproduction are determined by the nature and functions of the state.

The essence of finance is manifested in their functions , which is understood as the "work" performed by finance. Finance performs three main functions: distributive, stimulating and control.

Distributive function of finance. The distribution of the national income consists in the creation of the so-called basic or primary incomes. Their sum is equal to the national income. The main incomes are formed during the distribution of national income among the participants in material production. However, the distribution of the national income is not limited only to the distribution among those who created it, that is, among the participants in material production, but also to the non-productive sphere, where the national income is not created. Such areas and areas include the development of priority sectors of the national economy, ensuring the country's defense capability, education, healthcare, management, social insurance and social security, maintaining depressed regions, etc.

Control function of finance. The control function is to control the distribution of gross domestic product, national income for the relevant funds and their spending for the intended purpose. The control function of finance is carried out through the multifaceted activities of financial authorities. Employees of the financial system, the treasury and the tax service exercise financial control in the process of financial planning, in the execution of the revenue and expenditure parts of the budget.

The stimulating function of finance. The essence of this function of finance is that the state, with the help of a whole system of financial levers, can influence the development of enterprises, entire industries in the direction necessary for society. Financial levers are: b budget, prices, tariffs, taxes, export-import duties.

2. Financial system, its elements and their relationship

The financial system is a combination of various spheres or links of financial relations, each of which is characterized by features in the formation and use of funds of funds, a different role, and social reproduction.

The existing differences both in the functional purpose of these subsystems, and in the methods, methods of formation and use of financial resources make it expedient to single out separate systems of financial relations: finances of organizations (economic entities), public finances (state and municipal finances), finances of households (population).

The state budget is the main link of the entire financial system. The state budget is the centralized monetary income of the state.

In addition to the state budget, extra-budgetary funds are formed and used in any economy. Off-budget funds are funds from the federal government and local authorities associated with the financing of expenses not included in the budget. The formation of off-budget funds is carried out at the expense of mandatory earmarked contributions, which for an ordinary taxpayer (enterprise, individual) are no different from taxes. Extra-budgetary funds are separated from budgets and have a certain independence.

An important element of national finance is public credit - this is a set of economic relations that develop between the state, on the one hand, and legal entities and individuals, on the other, regarding the formation, distribution and use of a special centralized fund of funds on the terms of urgency, repayment, payment in for the purpose of carrying out the main functions of the participants in these relations.

Insurance funds provide compensation for losses incurred from natural disasters and accidents, and also contribute to their prevention.

Among the links of the financial and credit system, the stock market has a significant place, which is a special type of financial relations arising from the sale and purchase of special financial assets - securities. The main task of the stock market is to ensure the process of capital overflow in industries with a high level of income.

The second subsystem of the Russian financial system is the finances of enterprises.

The finances of enterprises are part of the financial system, its link and characterize monetary relations associated with the formation, distribution and use of monetary resources to fulfill their obligations to the state, other enterprises and firms, employees, etc.

In the overall structure of financial relations, this part of the financial system occupies a defining, or key, position, because it is the real sector of the economy. This is where wealth is created, goods are produced and services are provided.

Essence and functions of finance

The totality of monetary relations arising in connection with the movement of funds of monetary funds form financial relations, to which it is customary to include monetary relations arising in the process of expanded production between:

The state and enterprises (organizations) for paying taxes and other payments to the budget, as well as for financing a number of expenses of enterprises from the budget;

The state and citizens when making mandatory voluntary payments to the budget and extra-budgetary funds;

Enterprises and higher organizations when creating centralized funds of cash and reserves;

Enterprises and off-budget funds when making insurance contributions to these funds;

Enterprises and banks in obtaining loans, paying interest on loans, keeping funds in bank accounts;

Enterprises and insurance bodies when paying insurance premiums and indemnifying from the insurance fund for damage in the event of an insured event;

Enterprises and employees employed at these enterprises, when paying wages from the wage fund;

Economic entities (enterprises) in the course of their production and commercial activities when paying for purchased inventory items (raw materials, materials, fuel, electricity), as well as when selling finished products and providing services. The company sells its products, provides services and receives the corresponding revenue. In this case, there is a change in the forms of advanced value (T-D) and financial relations arise, as a result of which the enterprise receives the corresponding amount of gross income, which is the main source of profit and cash.

In this way, finance- this is a system of economic relations associated with the formation and use of funds of funds based on the distribution and redistribution of GDP of national income and part of national wealth. Finance includes specific forms and methods of relationships between the state, enterprises (organizations) and citizens.

The following can be distinguished main features of finance:

Economic relations between business entities using money. At the same time, money is the material basis for the existence of finance;

In the process of economic relations, the formation of monetary funds from economic entities and the state and their use are carried out. The essence of finance, their specific content is revealed in their functions.

Finance, as an economic category, is a set of monetary relations regarding the distribution and redistribution of the value of the gross domestic product, national income and part of the national wealth, which results in the formation of cash incomes, receipts and savings of business entities, the state used to solve economic and social problems .

Functions of Finance

Under finance functions the manifestation of their inherent properties (appointment, activity, obligation, use, role), i.e. their role that they perform in the system of economic relations, is understood. The functions of finance concretize their essence, reveal its content.

Finance as an economic category is characterized by two functions: distribution and control.

The first function of finance at the national level is to distribution and redistribution national income, the material basis for the creation of which is the reproduction of GDP.

The national income is divided into two parts - the accumulation fund (for expanded reproduction) and the consumption fund. The ratio of these parts determines the proportions of the development of the economy and its structure.

In the future, there is a need to redistribute the national income between the production and non-production spheres, as well as across regions.

The ultimate goal of the distribution and redistribution of GDP and national income is to develop productive forces, strengthen the state, and achieve a high quality of life for the general population.

Finance performs its distributive function also in the process of formation and distribution of income of the enterprise (organizations).

Through the distributive function of finance, enterprises form funds of funds at the expense of proceeds from the sale of goods, finished products and work performed, direct them to reimburse costs (payment for goods, material costs, payment of wages) and the formation of net income (profit). A certain share of net income is contributed to the budget revenue.

The second function of finance is control. It is generated by the distribution function and manifests itself, first of all, in control over the distribution of the total social product and national income according to monetary funds and their targeted spending.

Finance at the level of the enterprise act as an instrument of control over the correct formation, distribution and use of funds of funds in the process of production and sale of products.

On a national scale, finance shows how the quantitative indicators of the distribution of financial resources, proportions or disproportions in the economy of industries, and the execution of the state budget are formed.

The distributive and control functions of finance are realized through the financial mechanism, which is part of the economic mechanism.

financial mechanism is a set of ways to manage financial relations.

It includes: forms of financial relations in the state; the procedure (rules) for the formation and use of centralized and decentralized cash funds; methods of financial planning; forms of financial management; financial legislation.