Financial Management

Question 1

What is accrual accounting

Answer 1

Recording transactions when they occur rather than when cash is received or paid

Paying on the next visit (owing something to a person or business)

An account of ALL that is owed to a business

Question 2

What are 3 reasons that accrual accounting is preferred?

Answer 2

1. Allows for better cash management - all prepaid memberships are recorded as 1/12 of the dues for each month of the year
2. Provides a more realistic picture of the financial status of the business
3. You can report the net worth of the club with this format

Question 4

How can you prepare to create a budget?

Answer 4

Gather info
Forecast sales
Project profits and losses
Operating benchmarks

Question 5

Elements of Budgeting

Answer 5

Guidelines and methodology
Two budgets with assumptions
Staff involvement
Incentives and monitoring

Question 6

What is accounts receivable?

Answer 6

This is the money that is owed for a service that has been provided, but has not been paid yet

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