section 4: unit 2 Budgeting, Prudent Procedures, and Security
Rob doesn't know much about accounting, so he just reviews the monthly financial statements. He figures he doesn't need an accountant because Sally, who's been with the firm since it opened, does all the work, and she's very protective of the records. What's wrong with Rob's approach?
A single individual shouldn't handle all accounting tasks.
It's October, and actual revenue for the year exceeds budgeted revenue by 32%. What should you do?
Add at least a portion of the excess to your reserve account or pay off some loan principal.
Funds belonging to others include which types of accounts?
Escrow
Rowena breaks the utilities budget of $5,200 into three smaller categories: electricity, $3,900; natural gas, $1,200; and trash disposal, $100. This is an example of calculations for a _______.
Variable expense budget
What is the escrow journal?
A chronological record of all activity in an escrow account
Brian received an earnest money check from his buyer. He presented it to the seller's broker. What should he do now?
Get and keep a receipt for the funds he transferred.
Which of the following would appear on your budget?
Gross income
Which of the following is the best definition of a budget?
It's a detailed management and planning tool that serves as your earnings and spending goal for a period of time.
Jen looks at the general operating budget and divides each line item by 12. These figures become the budgeted figures for the _____.
Monthly operating budget
Which one of the following options describes a budget deficit?
Overall, you've spent more than you've earned.
The agricultural sales department has become responsible for generating enough revenue to cover 28% of overall budgeted expenses for the firm. What kind of budget will it create?
Profit center budget
The purpose of a variable expense budget, monthly operating budget, or profit center budget is to ____.
Provide more detail than the general operating budget
Which of the following is included in gross income?
Rental income from investment properties
No matter what budget is in use, consistent or dramatic variations from budgeted amounts ______.
Should be reviewed to find the cause, and spending should be adjusted if necessary