chapter 17.1

Question 1

financial planning

Answer 1

is the process of setting financial goals and developing plans to reach them

Question 2

revenue

Answer 2

is the earnings that a business receives for the goods and services it sells

Question 3

expense

Answer 3

are the costs involved in operating a business

Question 4

financial management

Answer 4

is a process used to manage the financial resources of a business

Question 5

accounting

Answer 5

is the system of recording business transactions and analyzing, verifying, and reporting the results

Question 6

generally accepted accounting principles (GAAP)

Answer 6

are the rules, standards, and practices businesses follow to record and report financial information

Question 7

audit

Answer 7

is a review of the financial statements of a business and the accounting practices that were used to produce them

Question 8

business entity

Answer 8

is an organization that exists independently of the owner’s personal finances

Question 9

fiscal period

Answer 9

is the period for which a business summarizes accounting information and prepares financial statements; the accounting period

Question 10

budget

Answer 10

is a financial plan that reflects anticipated revenue and expenses and shows how it will be allocated in the operation of the business

Question 11

sales forecast budget

Answer 11

is projected sales units and revenue dollars for the period

Question 12

sales forecast

Answer 12

Prediction of future sales based on past sales

Question 13

start-up budget

Answer 13

A budget created in the planning stages for a new business

Question 14

operating budget

Answer 14

is a projection of the sales revenue that will be earned and the expenses that will be incurred during a future period

Question 15

cash budget

Answer 15

is used to estimate the amount of money coming into and going out of the business

Question 16

source document

Answer 16

are records that prove a business transaction occurred.