covers social security and medicare taxes
Federal Insurance Contributions Act
how often employees are paid
identifies customers that made purchases using credit and the status of each account
accounts receivable record
amounts owed by the business that will be paid within a year
ex. short term loans from a bank, accounts payable
detailed plans for the financial needs of individuals, families and businesses
What is the purpose of payroll taxes?
to fund government projects like roads, schools, parks, etc
- shows the company's assets, liabilities and owner's equity as of a specific date
- a report that lists a company's assets, liabilities and owner's equity at a specific point in time
all income that a business receives over a period of time; the money the company is making
anything of value that a business OWNS
the assets with a lifespan of more than a year
ex. land, buildings, equipment and expensive technology
long term assets
budget that plans income and expenses from the beginning of a new business or expansion until it becomes profitable
start up budget
amounts that a business OWES
extra money only available to certain employees
commissions, bonuses, profit sharing
what is the accounting equation?
assets = liabilities + owner's equity
assets - liabilities = owner's equity
the result of expenses being greater than income; another term for loss
a report of revenue, expenses and net income or loss from operations for a specific period
employers transfer employees' net pay electronically directly into their bank accounts
employees are either paid a salary or an hourly rate
How is profit calculated?
What is the basic financial equation?
Revenue - Expenses = Profit or Loss
financial documents that are used to record and analyze the financial performance of a business
ex. a/p record, a/r record, depreciation record
What are the 4 steps in budgeting process?
- prepare a list of each type of income and expense that will be part of budget
- gather accurate info from business records and other sources for each type of income and expense
- create the budget by calculating each type of income, expense and the amount of net income or loss
- explain the budget to people who need financial info to make decisions
- a financial document that identifies the companies from which credit purchases were made and the amount purchased, paid and owed
- payments to other vendors (businesses) that will be paid at a later date
cash and those items that can be readily converted to cash such as inventory and accounts receivable
expenses that only happen once in awhile
ex. car repairs, Christmas bonus, car registration
a budget that plans income and expenses from the beginning of a new business or a major business expansion until it becomes profitable
start up budget
a financial document that identifies customers that made purchases using credit and the status of each account; amounts the customers owe the company
What is the purpose of a balance sheet?
- to help determine how business is performing
- shows how much the business is worth on the date its prepared
What are the 3 types of budgets?
- start up budget
- operating budget
- cash budget
a tax paid by BOTH employees and employers to the federal government, it's used to pay for retirement benefits, widows and disability benefits
social security tax
- the financial plan for the ongoing operations of the business
- covers 3 months, 6 months or a year