Module 4: Budgeting

These flashcards cover essential vocabulary and concepts related to budgeting, including definitions, processes, and financial management principles.

Budgeting

A process that creates a spending plan, ensuring sufficient funds for needs and important priorities.

Budget

A report providing a financial description of a component of a business or planned activity.

Operating Cycle (Retail)

The process of using cash to buy inventory, selling goods to customers, and collecting cash from customers.

Operating Cycle (Service)

The process of using cash to acquire supplies or services, selling these services, and collecting cash from customers.

Master Budget

A comprehensive financial plan detailing goals, activities, resources, and expected results for an operating cycle.

Sales Budget

A budget that classifies the number of unit sales expected and lists the average expected unit price with total sales.

Purchases Budget

Shows required purchases in each month necessary to meet expected sales and maintain desired inventory levels.

General and Administrative Expenses Budget

Reflects expenses and cash payments related to expected activities other than selling.

Cash Budget

A projection of expected cash receipts and payments and their effect on the business's cash balance.

Cash Management

The practice of monitoring a business's cash balance to ensure sufficient funds for operations.

Projected Income Statement

A summary of expected revenues and expenses for the budget period, predicting profit if plans are followed.

Financial Budget

A category within the budget focused on cash flows, revenues, and expenses.

Operating Budget

A category within the budget that includes detailed plans for operational activities.

Projected Balance Sheet

A document summarizing the expected financial position at the end of a budget period, including assets, liabilities, and equity.

Social Impacts in Budgeting

The consideration of a business's effects on society in its budgeting process.

Environmental Impacts in Budgeting

The consideration of a business's ecological effects in its budgeting and planning.

Fixed Expenses

Costs that remain constant regardless of changes in the level of goods or services produced.

Variable Expenses

Costs that vary directly with the level of production or sales.

Cash Buffer

An amount of cash set aside to manage unforeseen financial circumstances.

Discipline in Planning

The order and structure added to the planning process through budgeting.

Cash Receipts

The cash inflows a business expects to collect during a budget period.

Cash Payments

The cash outflows a business expects to make during a budget period.

Expected Financial Results

The forecasted outcomes regarding financial performance for a business over a given period.

Benchmark for Evaluation

A standard or point of reference used to measure the performance of a business.

Stakeholders

Individuals or groups interested in the success and performance of a business, including its social and environmental impacts.

Fixed Costs Adjustments

Reviewing and modifying fixed expenses based on current financial plans.