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All income that a business receives over a period of time.
are the costs of operating a business
Provides detailed plans for the financial needs of individuals, families, and business.
plans income and expenses from the beginning of a new business or major business expansion until it becomes profitable.
Describes the financial plan for ongoing operations of the business for a specific period.
An estimate of the actual money received and paid out for a specific period.
Used to record and analyze the financial performance of a business.
What the company owns
Are what the company owes
The value of the owner's investment in the business
The assets, liabilities, and owner's equity for a specific date are listed
To report the revenue, expenses and net income or loss from operations for a specific period
The financial record of employee compensation, deductions, and net pay
are the documentation used to process earnings payments and record each employee's pay history
the employer transfers net pay electronically into the employee's bank account
Financial Performance Ratios
Comparisons of a company's financial elements that indicate how well the business is performing
Differences between actual and budgeted performances
If revenue is greater than expenses
If expenses exceed revenue
Business Budget: 2 Main Purposes
1. Anticipate sources and amounts of income for a business.
2. Predict the types and amounts of expenses for a specific business activity or the entire business
Budgeting Process: Four Fundamental Steps
1. Prepare a list of each type of income and expenses that will be a part of the budget.
2. Gather accurate info from business records and other info sources for each type of income and expense.
3. Create the budget by calculating each type of income, expense, and the amount of net income or loss.
4. Explain the budget to people who need financial info to make decisions.
Types Of Records
1. Assets Records - identify the buildings and equipment owned by the business, their original and current value, and the amount owned if money was borrowed to purchase the assets.
2. Depreciation Records - identify the amount assets have decreased in value due to their age and use
3. Inventory Records - identify the type and quantity
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