True or false: all income that a business receives over a period is called profit
False
An operating budget will determine if a business has enough funds to pay bills that are due
False
Sales and profits for a specific period are reported in a company’s income statement
True
Assets - Liabilities = owner’s equity (T/F?)
True
Payroll taxes consist of ONLY income taxes (T/F?)
False
The company’s liabilities divided by the owners equity is the current ratio (T/F)
False
At the end of the period covered by a budget, the business will prepare a new financial statement (T/F)
True
A business with will profit if....
revenue is greater than expenses
When a business expands,
New factories or equipment may be needed
For long established businesses, the main source of budget information is
The businesses previous records
Which of the following is NOT generally a goal of a business budget?
To convince employees to take a pay cut to avoid bankruptcy
The first step in the budgeting process is to...
Prepare a list of types of income and expenses
Which type of budget is an estimate of the actual money received and paid out for a specific period
Cash budget
An operating budget is usually planed for...
all of the above
(3-6months, one year)
Which type of financial records identity the amounts assets have deceased in value due to...
Depreciation records
In simple terms, ___are what a company owns
Assets
Which of the following is NOT a long term asset
office supplies
Total revenue - total expenses
net income / loss
An income statement usually covers
Six months to a year
All of the following would be considered expenses EXCEPT
Interest earned on investments
Which of the following is NOT a common way businesses pay employees
Yearly
Which of the following would NOT be considered an employee benefit?
Regular salary
most businesses include a ___ with employee’s paycheck
Earnings report
This shows how much profit is being made by each dollar of sales for the period
Net income ratio
The final step in the financial decision making process is to
make needed adjustments to the budget
The costs of operating a business are called
Expenses
A detailed plan for a business’ financial needs is called a
Budget
A ___ budget plans income and expenses from the beginning of a business until it becomes profitable...
Start-up
A _____ budget describes financial plan for ongoing functions of the business for a specific period ...
Operations
____ records are financial records that name the buildings and equipment owned by a business
Assets
___ records identify the type and number of products on hand for sale
Inventory
Records of ____ identify all purchases and sales make using credit
Accounts
A company reports its assets, liabilities, and owner’s equity on the ___ sheet
Balance
___ includes cash and those items that can be readily converted into cash
Current
With ____ deposit, an employer transfers net pay electronically into an employers bank account
Direct
Financial performance ___ are comparisons of a company’s financial elements
Ratios
A ____ is a difference between actual and budgeted performance
Discrepancy
Assets are on the right side of the balance sheet (T/F)
False
Liabilities are things that you owe (T/F)
True
Owner’s equity is the owner’s investment into a business (T/F)
True
Owners equity is on the left side of the balance sheet (T/F)
False
Assets are things you owe (T/F)
False
Balance sheet equation
assets = liabilities + owners equity
What are two main purposes of a business budget?
Anticipate sources and amounts of income
predict the types and amounts of expenses for a specific business activity or the entire business
name and briefly describe each element on a balance sheet
Assets are what a company owns and it is on the left side of the balance sheet.
liabilities are what a company owes and it is on the right side of the balance sheet
owners equity is the value of the owner’s investment and it is on the left side of the balance sheet
