The term “treasury” appears frequently in accounting literature. Although the basic definition of this term proves relatively simple, the actual meaning of the word depends completely on context. Treasury as an abstract concept differs from the nature of a treasury department, which in turn differs from the U.S. Department of the Treasury. Treasury also appears in connection to securities, such as bonds and stocks.
The word treasury first appeared in the late 13th century. The word “treasury” derives from the French “tresorie,” which literally means “room for treasure.” In its most basic definition, a treasury constitutes a place to store wealth, or a depository for the collection and dispersal of funds. It may also refer to the funds kept in such a depository. In accounting, a reference to "treasury" without further context may simply denote a place where a company, organization, government or other entity stores its capital.
A treasury department constitutes the part of a business or other organization responsible for monitoring and maintaining all of the organization’s capital or treasury — it holds the purse strings, so to speak. The treasury department creates projected cash flow, ensures that a company holds enough capital to continue to operate at optimum levels and monitors all decisions regarding the expenditure of capital. Treasury departments must balance the needs of a company with needs of its investors and holders of debt. Accountants work directly with the treasury department of a company on financial matters.
U.S. Department of the Treasury
The Department of the Treasury is a branch of the United States government. Self-described as the steward of the United States economy and financial systems, the Department of the Treasury advises the president on financial matters, develops governance methods for financial systems and encourages sustainable growth. Government accountants work with and often for the Department of the Treasury on matters of national economic importance. The Department of the Treasury sells bonds and notes available for purchase as securities. These bonds and notes affect the work of investment and government accountants.
The term “treasury stock” appears in accounting matters that relate to capital structure and accounting in publicly traded corporations. Treasury stock constitutes all stock that the company buys back from investors. Various reasons exist for reacquiring stock, among them reducing the number of outstanding shares, thwarting takeover via stock purchase, reissuing shares to the public at lower prices or simply retaining a measure of ownership in the firm. Accountants working for publicly traded companies must work with treasury stocks when they keep company books.
- Merriam-Webster: Treasury
- Online Etymology Dictionary; Treasury; Douglas Harper
- U.S. Department of the Treasury: About -- Duties & Functions of the U.S. Department of the Treasury
- “Treasury Management: The Practitioner’s Guide”; Steven M. Bragg; 2010
- AccountingDictionary.com: Treasury
- BusinessDictionary.com: Treasury Stock
- SmartMoney: Bond Glossary