Lesson 4 - Financial Planning

The basic financial equation for a business is:

• Assets = Liabilities + Owner's Equity

• Revenue - Expenses = Profit/Loss

• Assets - Depreciation = Current Value

• Assets +/- Profit/Loss = Company Value

The amount a company owes (debt) is called:

• Expenses

• Assets

• Owner's Equity

• Liabilities

All of the following are types of budgets businesses prepare except:

• personal budget

• cash budget

• operating budget

• start-up budget

All the income a business receives over a period of time is called:

• Expenses

• Assets

• Revenue

• Owner's Equity

Steps in preparing a budget include all of the following except:

• Listing expenses and income.

• Publish the budget on your company's website.

• Gathering accurate information from business records.

• Creating the budget by calculating each type of income, expense, and the am

The difference between actual and budgeted performance is called:

• miscalculations.

• accounting errors.

• budget deficiencies.

• discrepancies.

Financial ratios that businesses use to measure their performance include of all of the following except:

• current ratio.

• debt to equity ratio.

• return on equity ratio.

• body fat ratio.

The three steps in financial decision-making include all of the following except:

• preparing a budget.

• using the budget to operate the business.

• make needed adjustments.

• publish the budget for everyone and anyone to see.

Things a company owns. It is anything of valued that is owned by a business.

• liabilities

• assets

• expenses

• net profit

The costs of operating a business are called:

• expenses

• liabilities

• assets

• revenue