Chapter 4 Review

Why is it important that a budget be balanced? If your budget does not balance, what can you do to bring it into balance?

A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Many economists argue that moving from a budget deficit to a balanced budget decreases interest rates, increases investment, shrinks trade deficits and helps the economy grow faster in the longer term.

How are wants different from needs? What are some wants that you have?

A need is something you have to have to survive or complete a task. A want is simply the desire for something, in many cases something to satisfy a need. ... You need food because you are hungry but you want Pizza.

How do financial resources limit a person's spending choices?

Calculate your bare-bones budget. Add savings and debts, in order of priority, to your list.

What is discretionary income? How does it affect your spending?

Discretionary income is the amount of an individual's income that is left for spending, investing or saving after paying taxes and paying for personal necessities, such as food, shelter and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.

How can you protect your electronic records from unwanted invasions of privacy? How can you protect your manual records?

Encrypt your data. Anti-malware protection is a must. Automate your software updates. Use a firewall. Disable file and media sharing if you don't need it. Don't forget to delete old files from cloud backups. Take care of privacy settings immediately upon setup.

Describe how you can keep financial records manually.

Establish Business Bank Accounts. Avoid Using Cash. Schedule a Specific Time Each Week. Purchase the Right Accounting Software. Tax Obligations. Keep a Complete Record of Accounting Documents.

How are fixed expenses different from variable expenses?

Fixed expenses cost the same amount each month. These bills cannot easily be changed and are usually paid on a regular basis, such as weekly, monthly, quarterly or from year to year. It's much easier to budget for fixed expenses than a variable expense or discretionary expense.

Why is a good recordkeeping system important?

Keeping good records is vital for any business. Whether that's to help manage your costs, whether it's for legal, regulatory or tax reasons, or simply to help manage and improve your business. Collecting, storing and effectively analyzing your data is vital.

What is the benefit of comparing monthly cash flow and net worth statements over time?

Know how much you are spending and if you need to adjust some of your expenses

Why is philanthropy important in our society? What can you do to make a difference?

Philanthropy is important because it provides opportunities. The philanthropic contributions from the foundation provided funding for HIV/AIDS testing, research and prevention and had a positive impact on all of society. Philanthropy has played a very important role in American society.

What are two ways that you can keep records electronically?

Stay compliant. Electronic Records Management grew out of Physical Records Management.

What are the four steps in preparing a budget?

Step 1: Identify Your Goals. Step 2: Review What You Have. Step 3: Define the Costs. Step 4: Create the Budget

How can you use a spreadsheet to help with budgeting?

Step 1: Note your net income. Step 2: Track your spending. Step 3: Set your goals. Step 4: Make a plan. Step 5: Adjust your habits if necessary.

What is included in a monthly budget?

The first step to creating a budget is to find and gather all of your monthly bills. This includes everything that you pay on a monthly basis, such as mortgage or rent, credit cards, utilities, cable, Internet, etc.

Explain how income is different from wealth. Briefly describe the difference between wealth and income, and the significance of the two concepts for understanding social inequality.

Wealth refers to the stock of assets held by a person or household at a single point in time. ... Income refers to money received by a person or household over some period of time.