MONEY SUPPLY Definition

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MONEY SUPPLY is the three categories of money supply (MI, M2, M3) as defined by the U.S. Federal Reserve Board.

M1 The sum of-currency held by the public, plus travelers' checks, plus demand deposits, plus other checkable deposits-i.e., negotiable order of with­drawal (NOW) accounts, automatic transfer service (ATS) accounts and credit union share drafts.

M2 MI plus savings accounts and small-denomina­tion time deposits, plus shares in money market mutual funds (other than those restricted to institu­tional investors) and overnight Eurodollars and repurchase agreements.

M3 M2 plus large-denomination time deposits (over $100,000) at all depository institutions, large­-denomination term repurchase agreements and shares in money market mutual funds restricted to institutional investors.

Learn new Accounting Terms

CAP RATE see CAPITALIZATION RATE.

UNIFORM CAPITALIZATION RULES (UNICAP), in the U.S., is a method of valuing inventory for tax purposes that requires capitalization of direct costs, e.g. material and labor, and an allocable portion of indirect costs that benefit or are incurred because of production or resale activities. Certain expenses must be included in the basis of the property or in inventory costs rather than currently deducted. These costs are then recovered through depreciation or amortization or as cost of goods sold.

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