Financial Mgt - Budgeting Lesson 1

Name an activity related to finance that involves planning and controlling income and expenses.

• Budgeting

• Investing

• Auditing

• Tax Filing

The activity in finance that involves distributing profits to shareholders is called:

• Investment

• Dividend distribution

• Capital gain

• Asset allocation

What is the role of forecasting in an effective financial plan?

• To predict future financial conditions and trends

• To record past financial transactions

• To eliminate all financial risks

• To ensure compliance with tax regulations

An effective financial plan explains acquiring money for growth or expansion by:

• Identifying potential funding sources

• Ignoring financial risks

• Focusing solely on cost-cutting

• Avoiding any form of investment

What is an example of a business asset?

• A) Cash

• B) Equipment

• C) Buildings

• D) All of the above.

Which of the following is an example of a start-up expense?

• A) Payroll

• B) Business assets

• C) Rent

• D) Utility bills

Which of the following is an example of an operating expense?

• Utility bills

• Business assets

• Remodeling costs

• Security deposits

Which of the following is an example of an operating expense?

• A) Delivery charges

• B) Business assets

• C) Remodeling costs

• D) Security deposits

What is a Cash Budget?

• A plan for your income and expenses from the time you start a business to estimated time it will make a profit

• A plan for the actual money the business owner spends on a daily, weekly, or monthly basis

• A plan for the amount expected to be spent and earned over a given period of time, usually six months or a year

To prepare a budget, a business must be able to identify and predict the amount of each source of income and each type of expense.

• True

• False