Obj. 5.02 Part A Review

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The most important reason for budgeting is to

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accomplish a financial goal.

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The definition of a budget is

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an estimate of income and expense for a specific period.

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Budgets can be described in terms of: money, maps, and management.

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money, maps, and management.

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In budgeting, utility bills, salaries, advertising, equipment purchases, taxes, and loans are examples of

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business expense.

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By regularly reviewing their budgets, businesses are able to determine if they are

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following their financial plans.

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When a business owner or manager uses a budget, s/he

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makes more informed decisions.

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What is the relationship between a business’s goals and its budget?

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Budgets translate a company’s goals into actual means for accomplishing them.

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What is the benefit of having written records of financial transactions?

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Information is accurate, accessible, and meaningful.

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A budget helps a business evaluate long-term performance by

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providing benchmarks of past performance.

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The difference between a budgeted amount and an actual amount is called

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a variance.