module 1-Personal budgeting

Question 1

Budget equation

Answer 1

income-spending = surplus / deficit

Question 2

budgeting steps

Answer 2

1. Define goal and gather data
2. Form expectations reconcile goals and data
3. Create budget
4. Monitor outcomes, analyze discrepancies
5. Adjust budget, expectations or goals.

Question 3

Recurring income

Answer 3

Earnings from wages, interests, dividends, social security benefits, and pension income.

Question 4

Recurring expenditures

Answer 4

include living expenses, loan repayments, regular saving or investment deposits

Question 5

nonrecurring expenditures

Answer 5

includes large capital improvements such as a new roof in your house (things you cant forsee)

Question 6

what is an asset

Answer 6

anything you own that has value to you.

for a business: in item you use to make money in your business (cash, land, trucks, equipment)

Question 7

short term asset

Answer 7

something that has value within a year or less

Question 8

long term asset

Answer 8

something with value for mote than a year Ex. a car

Question 9

2 assets in business

Answer 9

• accounts receivable

- inventory

Question 10

accounts receivable

Answer 10

money you were owed by clients (credit)

Question 11

inventory

Answer 11

the sum of the unsold stock of a business

Question 12

liability

Answer 12

obligation that you must pay. (bank loans, taxes owed, wages owed.)

Question 13

financial planning

Answer 13

increasing your assets while you decrease your liabilities

Question 14

nonrecurring income

Answer 14

sources of income that cannot be counted on (lottery)

Question 15

personal liquidity

Answer 15

state of possessing liquid assets such as cash and other assets easily converted to cash

Question 16

Cyclically

Answer 16

If the economy is in a period of contraction or recession, demand for labor is lower, competition among workers is higher, and wages cannot be expected to rise.

Question 17

Expenses

Answer 17

costs incurred to produce revenues. Expenses are measured by assets surrendered or consumed in serving customers

Question 18

micro factor

Answer 18

Personal factors such as family structure, health, career choice, and age have significant influence on financial choices and goals.

Question 19

macro factor

Answer 19

affecting your budget come from the context of the wider economy.

Question 20

cash budget

Answer 20

rearrangement of budget items to show each month both cash inflows and outflows in detail

Question 21

budget discrepancy

Answer 21

occurs when the actual results of your financial activity differ from your budgeted projections

Question 22

factors used to form a budget expectation

Answer 22

• financial history
• micro and macro economic factors
• new information

Question 23

bank reconciliation

Answer 23

a schedule the company prepares to reconcile or explain the difference between the cash balance on the bank statement and the cash balance on the company’s book.

Question 24

Bank statement

Answer 24

is a record of your bak accounts transactions prepared by the bank

Question 25

deposit in transit

Answer 25

a deposit recorded in the personal records in one period but recorded as a deposit by the bank in the succeeding period.

Question 26

personal records

Answer 26

includes a list of all cash transactions