BUSINESS & PERSONAL FINANCELEVEL 3M

DEFINITION

• Money management is the control of cash flow.

Various sources of income

• Wages

• Allowance

• Gifts

Activities involved in managing money

• Set goals

• Make economic decisions

• Spend wisely

• Live within means

Flexible Expenses

• Flexible Expenses that can be adjusted or eliminated, such as those for luxuries, as opposed to fixed expenses, such as rent or car payments.

Types of Expenses

Fixed expenses do not depend on your consumption of a good or service. A fixed expense is a cost that does not change from period to period or that changes only very slightly. Fixed expenses are usually paid on a regular basis, such as week to week, month to month, quarter to quarter or year to year. Typical household fixed expenses are mortgage or rent payments, car payments, real estate taxes and insurance premiums.

Financial Status

• Cash flow statement

• Expenditure

Expenditure

Steps to develop a spending plan to satisfy goals.

Budget: allocation of funds

• Balance your budget

• Estimate your expenses

• Estimate your income

• Plan for savings

• Set goals for spending

Types of Budgets

• Start-up: The amount of money needed to begin a company. It includes not only the money to buy needed goods, but also money to cover the initial expenses of the company.

• Operating:-- a detailed outline of all estimated income and expenses during a given future period.

• Cash: an estimation of cash payments and receipts during the next planning period.

Successful characteristics to creating a budget

• Utilize a spreadsheet or worksheet

• Estimate your income

• Estimate your flexible expenses

• Plan your savings

• Balance and adjust your budget

Definition

• Accounting consists of:

• Planning

• Recording

• Analyzing and interpreting financial activities

Classify business items with value

• Assets – Anything owned by an individual that has a cash value. This includes property, goods, savings or investments.

• Liabilities – anything that is owed to someone else.

Capital

• assets available for use in the production of further assets

• wealth in the form of money or property owned by a person or business and human resources of economic value

• a seat of government

Show the relationship among assets, liabilities and capital

• Accounting equation ( A = L + C)Analyze the affects of transactions on the

accounting equationAssets = Liabilities + Capital (revenue –expense)

Use T accounts to analyze cash transactions

Cash payments/purchaseCash receipts/sales

Record simple business transactions

Cash journal

Prepare a simple financial statement

Balance sheet Income Statement

Use technology to record business transactions

Explore careers identified with accounting

• Record keepers

• Account’s clerk

• Bookkeepers

• Accountants

• CPA’s

• CA’s

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Closure

• Write a paragraph indicating What did know before exploring this topic

• What did I want to know?

• What Have I learned?

• Add this to your portfolio.