MH 3.06 Money Tracks

The most important reason for budgeting is to

• plan for retirement

• accomplish a financial goal

• save for a rainy day

• increase personal wealth

Effective budgets should always be

• evaluated

• inflexible

• optimistic

• secretive

Budgets can be described in terms of

• money, maps, and management

• desires, debt, and discipline

• account books, bills, and bankruptcy

• savings, sales, and success

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

• business income

• spending controls

• financial goals

• business expense

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

• paying interest to customers

• offering loans to employees

• following their financial plans

• receiving discounts from vendors

When a business owner or manager uses a budget, they

• make more informed decisions

• have to try to make it interesting

• demonstrate leadership

• can more accurately evaluate employees

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

• Goals state the big picture and are unrelated to a detailed budget.

• Goals are established after the budget so that they are realistic.

• Budgets reflect real business activity while goals are usually unrealistic.

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

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

• Expenses are reduced, and income is increased.

• Accounting is simplified and less detailed.

• Information is accurate, accessible, and meaningful.

• Investments are increased, and profit is reinvested.

A budget helps a business evaluate long-term performance by

• providing benchmarks of past performance.

• creating a trail of management decisions.

• comparing what is currently budgeted to what is actually being earned and spent.

• providing details of all related activities.

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

• the balance sheet

• a safety net

• a variance

• financial evaluation