Chapter 7 Flashcards
Business plan
Plan developed for a proposed business venture based on a preliminary evaluation and information gathered from research
Goal
The object (or aim) of a person’s ambitions or efforts
Personal financial planning
Process of setting financial goals in order to satisfy a need
Needs
Items of necessity
Wants
Items of desire
Strategy
A plan of action designed to achieve a goal
Budgeting
Process of allocating income and expenditure over a future period
Personal financial statement
Statement listing the items an individual owns (assets) and the amount of debt they owe to someone else (liabilities). (Similar to a balance sheet).
Income statement
Statement showing the income/deficit resulting from income and expenditure over a period
Net worth
Net worth represents the amount of money a person would have left over if all their assets were sold to pay off their debts
Fixed assets
Assets that are real (for example, buildings, equipment, vehicles).
Current liabilities
Debts that are due to be paid within the year
Target annual retirement income
Amount of income required to cover estimated retirement expenses
Annual retirement income
The various sources of income that can be used to fund retirement
Retirement income gap
The surplus or deficit in income required to fund one’s retirement
