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All income that a business receives over a period of time.
The costs of operating a business.
Provides detailed plans for the financial needs of individuals, families, and businesses.
Plans income and expenses from the beginning of a new business or a 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 a company owns.
What a company owes.
The value of the owner's investment in the business.
Where the assets, liabilities, and owner's equity for a specific date are listed.
Prepared to report the revenue, expenses, and net income/loss from operations for a specific period.
The financial record of employee compensation, deductions, and net pay.
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 performance.
If revenue is greater than expenses.
If expenses exceed revenue.
- 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.
Four Steps of the Budgeting Process.
- 1. Prepare a list of each type of income and expense 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.
- 4. Explain the budget.
Types of Records.
- 1. Asset Records- identifies the buildings and equipment owned by the business, value, and amount owed.
- 2. Depreciation Records- identifies the amount assets have decreased in value due to their age and use.
- 3. Inventory Records- identifies the type and quantity of resources and products on hand.
- 4. Records of Accounts- identifies all purchases and sales made using credit.
- 5. Cash Records- lists all cash received and spent by the business.
- 6. Payroll Records- contains info on all employees of the company, their compensation, and benefits.
- 7. Tax Records- shows all taxes collected.
Maintains info on each employee to be able to calculate the company's payroll and to make the necessary payments to each employee.
- Current AssetsCurrent Liabilities.
Debt to Equity Ratio.
- Total Liabilities
- Owner's Equity
Return on Equity Ratio.
- Net Profit
- Owner's Equity.