business HW

BUS-121 Spring 2017 Money Management Skills: Name:

Instructor: Frank Caperino Financial Statements and Budgeting Chap 2 Assignments / Notes

Chapter Assignments: (10 points)

Required: Your Cash Flow Statement (a.k.a. Income Statement) & Net Worth Statement (a.k.a. Balance Sheet)

Your Personal Financial Plan: Sheets 6 & 7 at end of chapter 2, OR (It is better and easier to use the spreadsheet.)

(It is much easier to save the spreadsheet to your computer first, then open it with Excel. Because this

information is highly personal and very private, you may either decide to submit these two documents

with your true financial situation or use data from the problems on pages 66 & 67 or simply make up the

data based on your whims or desires or beliefs of what your financial situation should be. Either way, it is

in your best long-term financial interests to have your true net worth statement and cash flow statement

on-hand and up-to-date, especially the cash flow statement. I would be honored and happy to discuss

your individual situation with you. Do not hesitate to make an appointment with me. (All personal information is strictly confidential, as required and protected by law. These two documents are the two most important

financial planning documents you will ever create. Do a good job!)

Pages 66-68: Optional: Problems 1, 2, 3, 4, 6, 8, 10 (Problems like these most likely will be on the first exam.)

Page 69: Optional: Case in Point 1, 3

Page 69: Optional: Continuing Case 1, 2

Page 70: Optional: Video Case 1

Page 70: Optional: Spending Diary 1, 2

Your Personal Financial Plan: Highly Recommended: Sheet 5, Sheet 8

Due: Monday Feb 20, 2017

Chapter Sections:

A Successful Money Management Plan

Personal Financial Statements

A Plan for Effective Budgeting

Money Management and Achieving Financial Goals

Chapter Terms:

money management

safe deposit box versus home safe

net worth = assets - liabilities

net worth statement (a.k.a. balance sheet)

assets

liquid assets versus illiquid assets

liabilities (a.k.a. debts)

current liabilities versus long-term liabilities

insolvency (rule of thumb: if your short-term liabilities exceed your annual income, you are in danger of being insolvent)

cash flow = income - expenses

cash flow statement (a.k.a. income statement, budget)

income

expenses

fixed expenses versus variable expenses

discretionary income

budget (most people use the cash flow statement as their budget – Remember: Pay Yourself First!)

budget variance (planned income and expenses versus actual income and expenses)

deficit versus surplus