Budgets Flashcards
How do budgets benefit individuals and businesses?
You can use a personal budget to monitor and improve your net worth. You can also use a business budget to improve a business’s cash flow and to determine how much you can re-invest into the business to help it grow
What do you need to draw up a budget?
You need to know what income and expenditure figure you will be working with
What can you do if you don’t know exactly what your income and expenditure will be?
It’s important to make careful estimates and revise them as soon as yoy have real figures
How can you draw up a budget for a new business?
Research similar businesses to find out what they are earning and spending
Where does business income come from?
Sales of goods
Sales of services
Rental
Royalties
Dividends
List some business expenses.
. Capital expenses
. Staff salaries and wages
. Renting or buying premises from which the business operates
. Equipment
. Raw materials for production
. Office equipment such as computers, furniture and stationary
. Tax on the business’s income
. Interest on loans or credit
. Insurance
. Research and development
. Medical aid and pension fund contributions
. Unemployment fund contributions
. Education and training for staff
. Utilities for the business premises, such as water, electricity, phone lines and Internet connections
When you draw up a budget what are the three main columns?
Actual
Budget
Variance
What does the Actual column tell us?
What figures the business actually earned and spent
What does the Budget column tell us?
The amounts the business expected to earn and spend
What does the Variance column tell us?
The difference between the bugeted and actual figures
How do you show a negative amount in accounting?
By putting brackets around the amount
