Unit 4 Budgeting Test Review

Front

What is the cash envelope system of budgeting?

Back

A budgeting method where cash for different spending categories is allocated into labeled envelopes to help manage and control spending.

Front

What is zero-based budgeting?

Back

A budgeting strategy where every dollar of income is allocated to expenses or savings, ensuring no unaccounted money.

Front

How do you calculate the unit price of an item?

Back

Divide the total price by the number of units (e.g., price per ounce).

Front

What is the main purpose of budgeting?

Back

To plan and control financial resources, ensuring that income is allocated effectively to meet expenses and savings goals.

Front

What does the term 'fixed expenses' refer to?

Back

Expenses that do not change from month to month, such as rent or insurance.

Front

What is the difference between wants and needs in budgeting?

Back

Needs are essential expenses required for basic living (e.g., food, shelter), while wants are non-essential expenses (e.g., entertainment, luxury items).

Front

What is the 50/30/20 budgeting rule?

Back

A budgeting guideline that suggests allocating 50% of income to needs, 30% to wants, and 20% to savings or debt repayment.

Front

How can you determine if a budget is balanced?

Back

A budget is balanced when total income equals total expenses, with no deficit or surplus.

Front

What is an inequality in budgeting?

Back

An inequality represents a range of possible values for expenses or income, often used to set limits in budgeting scenarios.

Front

What does it mean to allocate funds in a budget?

Back

To assign specific amounts of money to different categories of expenses or savings.