Budgets, pg. 78 - 83

Question 1

What is a budget?

Answer 1

A budget is a written document plan on how to spend future income.

Question 2

List 3 reasons why people draw a budget.

Answer 2

Any 3:

1. To plan ahead and set financial goals
2. To check actual money spent against budgeted spending
3. To control expenditure and spend money wisely
4. To check if income will be enough to cover expenditure
5. To show possible future financial problems

Question 3

How can surplus be calculated?

Answer 3

Surplus can be calculated by subtracting total expenditure from total income.

Question 4

An individual will draw up a ______ budget to plan how personal _______ will be spent.

Answer 4

• Personal

- Income

Question 5

What happens when expenditure exceeds income?

Answer 5

Deficit.

Question 6

What happens when income exceeds expenditure?

Answer 6

Profit.

Question 7

Name 3 types of budgets.

Answer 7

1. Personal budget
2. Household budget
3. Business budget

Question 8

A budget also helps a _____ keep track of their ________s.

Answer 8

• Family

- Finances

Question 9

Why do businesses use budgets?

Answer 9

Businesses use budgets because they can control how money will be spent.

Question 10

List 3 reasons why a business would need savings.

Answer 10

1. Buying/upgrading expensive assets
2. Emergencies
3. Expanding and growing the business

Question 11

What is personal income?

Answer 11

Personal income = the amount an individual receives from employment, investments or running their own business.

Question 12

What is personal expenditure/expense?

Answer 12

Personal expenditure/expense = money spent by an individual or household.

Question 13

What is business income?

Answer 13

Business income = money received from operations, interest income or other income (rent/commission income).

Question 14

What is business expenditure/expenses?

Answer 14

Business expenditure/expenses = money spent on capital expenses, operating expenses and financing expenses.