1. MAINTAINING FINANCIAL INFORMATION
CHAPTER 14
MAINTAINING FINANCIAL INFORMATION

2. FINANCIAL PLANNING PURPOSES OF A BUSINESS BUDGET
ANTICIPATE SOURCES AND AMOUNTS OF INCOME
PREDICT THE TYPES AND AMOUNTS OF EXPENSES
REVENUES ARE SOURCES OF INCOME
EXPENSES ARE THE COSTS OF OPERATING A BUSINESS
BUDGETS ARE DIFFICULT FOR NEW BUSINESSES

3. BUDGET PREPARATION (TYPES OF BUDGETS)
START-UP BUDGET: PLANS INCOME AND EXPENSES FROM THE BEGINNING OF THE NEW BUSINESS
OPERATING BUDGET: DESCRIBES THE FINANCIAL PLAN FOR THE DAY-TO-DAY OPERATIONS OF BUSINESS
CASH BUDGET: AN ESTIMATE OF THE ACTUAL MONEY RECEIVED AND PAID OUT FOR A SPECIFIC PERIOD OF TIME

4. STEPS IN BUDGETING
STEP 1: PREPARE A LIST OF EACH TYPE OF REVENUE AND EXPENSE
STEP 2: GATHER ACCURATE INFO FROM BUSINESS RECORDS AND OTHER SOURCES
STEP 3: CREATE BUDGET; USE OF COMPUTER IS HELPFUL
STEP 4: SHOW AND EXPLAIN BUDGET TO PEOPLE WHO NEED FINANCIAL INFO TO MAKE DECISIONS

5. FINANCIAL RECORDS CASH RECORDS: ALL CASH RECEIPTS AND DISBURSEMENTS
RECORDS OF ACCOUNTS: ACCOUNTS PAYABLE AND ACCOUNTS RECEIVABLE
INVENTORY RECORDS: IDENTIFY TYPE AND QUANTITY OF PRODUCTS AVAILABLE
PAYROLL RECORDS: INFO ON EMPLOYEES AND THEIR EARNINGS
ASSET RECORDS: BUILDINGS AND EQUIPMENT OWNED; ORIGINAL COST AND CURRENT VALUE

6. FINANCIAL STATEMENTS
REPORTS THAT SUMMARIZE THE FINANCIAL PERFORMANCE OF A BUSINESS
INCOME STATEMENT-REPORTS REVENUES, EXPENSES, AND NET INCOME OR LOSS FOR A PERIOD OF TIME (LOSS-EXPENSES GREATER THAN REVENUES; INCOME-REVENUES GREATER THAN EXPENSES

7. FINANCIAL STATEMENTS CONTINUED
BALANCE SHEET- LISTS THE ASSETS, LIABILITIES, AND OWNER’S EQUITY; USUALLY PREPARED EVERY 6 MONTHS OR EVERY YEAR
COMPARE FINANCIAL PERFORMANCE FROM PREVIOUS PERIODS AND/OR SIMILAR BUSINESSES WITHIN THE INDUSTRY