Chapter 12 Section 1 Checkpoints

1. What is the basic financial equation for businesses?
Revenue - Expenses = Profit or Loss

2. What are the four steps in preparing a business budget?
- Prepare a list of each type of income and expense that will be a part of the budget.
-Gather accurate information 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 information to make decisions.

3.Identify and describe the three types of budgets needed by all businesses.
- Start-up budget
- Operating budget
- Cash budget