Chapter 12 Financial Management

  1. Revenue
    • Revenue-Expenses=profit or loss (basic financial equation)
    • all income recives over a period of time
  2. Expenses
    The costs of operating a business
  3. Profit or Loss
    • Revenue>Expenses (profit)
    • Revenue<Expenses (loss)
  4. Budget
    Provides detailed plans for financial needs of individuals, families, and businesses.
  5. Business Budget 2 main purposes
    • 1. Anticipate sources and amounts of income for a business
    • 2. predicts the types and amounts of expenses for a specific business activity or the entire business
  6. Types of Budget
    • Start-up Budget
    • Operating Budget
    • Cash Budget
  7. Start-up Budget
    plans income and expenses from the beginning  of a new business
  8. Operating Budget
    • describes the financial plan for ongoing operations of the business for a specific period
    • usually planned for 3 months 6 months or a year
  9. cash budget
    an estimate of the actual money received and paid for a specific period
  10. Budgeting Process
    • 1.prepare a list of income and expenses
    • 2.gather accurate info from business records
    • 3.create budget by calculating
Card Set
Chapter 12 Financial Management
chapter 12 financial management flash cards for PBA Mr. Stock p2