Friday, April 15, 2011

Ch 12 sec 1 assessments

1. true or false. financial planning is needed by small businesses only until they begin to make a profit.

2. the basic financial equation is
D revenue-expenses=profit or loss

3. true or false. a cash budget is an estimate fo the actual money received and paid out for a specific period.


5. a.   85,695-72,624=profit of 13,071
    b.   1,824,300-2,183,680= loss of 359,380
    c.    729,655-499,220= profit of 230,435

Ch 12 sec 1 Checkpoints

1. what is the basic financial equation for businesses?
revenue-expenses=profit or loss

2. what are the 4 steps in preparing a business budget?
-prepare a list of each type of incomeand expense that will be part of the budget.
-gather accurate information from business records and other info sources for each type of income and expense
-create the budget by calculating each type of income, expense, and the amount of net income or loss
-explain the budget to people who need financial info to make decisions.

3. identify and describe the 3 types of budgets needed by all businesses.
-Start up budget- plans income and expenses form the beginning of a new business
-operating budget – is the money used to operate the business to continue you cash flow
-cash budget- is the actual money received and paid out of a period of time.

Ch 12 sec 1 vocab

 1.       Revenue – a income that a business receives over a period of time.
2.       Expenses- are the cost of operating a business
3.       Budget- provides detailed plans for the financial needs of individuals, families, and businesses.
4.       Start-up budget – plans income and expenses from beginning of a new business or a major business expansion until it is profitable
5.       Operating budget –describes the financial plan for ongoing operations of the business for a specific period
6.       Cash budget-  is an estimate of the actual money received and paid out for a specific period of time