Chapter 16 Study Guide- Intro To Business 2
What is a budget?
A plan for saving and spending money
What is a financial plan?
A report that summarizes your current financial condition
What is a Roth IRA?
A retirement account where contributions are NOT tax deductible, all funds are tax free when withdrawn after age 59.5
What is a traditional IRA?
A tax sheltered retirement plan, annually invest earnings up to a certain amount -contributions are tax deductible -accumulate tax free until withdrawn after the age of 59.5
What is a variable expense?
An expense that changes from month to month
What is a fixed expense?
An expense that stays the same each month
What is money management?
Day-to-day financial activities associated with using limited income to satisfy unlimited needs and wants
What does a personal balance sheet find?
Finds Net Worth (value) of a person or family
How do you find owner's equity?
the difference between assets and liability (assets-liability)
What is social security and who receives the benefits?
-It provides pensions to retired workers and their families. -It provides death benefits to dependents of workers who die -Provides benefits to disabled workers and their families
What are the five steps to the financial planning process?
-analyze your current financial condition -develop financial goals that are responsive to your vision -create your financial plan -implement the plan -revise your financial plan
What are the characteristics of a successful budget?
-be realistic -be flexible -should be evaluated regularly -must be well planned and clearly communicated -should have a simple format
What are the four steps to the budget process?
-set financial goals -plan budget categories -maintain financial records -evaluate your budget
What are the main purposes of a budget?
-to help you live within your income -achieve your financial goals -to buy wisely -to avoid credit problems -plan for financial emergencies -develop good money management skills
What is does a personal cash flow statement report?
Reports net wages and other income along with spending for a period of time
What are pensions?
Series of regular payments made to a retired worker under an organized plan
What is budget variance?
The difference between actual and budgeted amounts