The flashcards below were created by user
knightone0730
on FreezingBlue Flashcards.
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Revenue
all income that a business receives over a period of time
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Expenses
costs of operating a business
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Budget
detailed plans for the financial needs of individuals, families, and businesses
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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
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Budgeting Process
- 1. Prepare a list of each type of income and expense that will be a part of the budget.
- 2. Gather accurate information from business records and other information 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 information to make decisions.
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Start-Up Budget
Plans income and expenses from the beginning of a new business or a major business expansion until it becomes profitable.
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Operating Budget
describes the financial plan for ongoing operations of business for a specific period
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Cash Budget
an estimate of the actual money received and paid out for a specific period
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Financial Records
used to record and analyze the financial performance of a business
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Types of Record 1: Asset Record
identify the buildings and equipment owned by the business, their original and current value, and the amount owed if money was borrowed to purchase the assets
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Types of Records 2: Depreciation Records
identify the amount assets have decreased in value due to their age and use
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Types of Records 3: Inventory Records
identify the type and quantity of resources and products on hand along with the current value of each. Accurate records are crucial to determine if adequate resources are available to meet operating and production needs as well as customer demand.
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Types of Records 5: Records of accounts
- identify all purchases and sales made using credit.
- - accounts payable record: identifies the companies from which credit purchases were made and the amounts purchased, paid, and owed.
- - accounts receivable record: identifies customers that made purchases using credit and the status of each account.
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Types of Records 6: Cash Records
list all cash received and spent by the business
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Types of Records 7: Payroll Records
contain information on all employees of the company, their compensation, and benefits.
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Types of Records 8: Tax Records
show all taxes collected, owed, and paid.
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Assets
what the company owns
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Liabilities
what the company owes
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Owner's Equity
the value of the owner's investment in the business
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Balance Sheet
where assets, liabilities, and owner's equity for a specific date are listed
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Income Statement
reports the revenue, expenses, and net income or loss from operations for a specific period
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Payroll
the financial record of employees compensation, deductions, and net pay
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Payroll Records
the documentation used to process earnings payments and record each employee's pay history
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Direct Deposit
auto transfer to employee's savings, etc.
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Financial Performance Ratios
comparisons of a company's financial elements that indicate how well the business is performing
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Discrepancies
differences between actual and budgeted performance
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