Budgets

• budgets are financial plan which looks at sales and revenue sets out financial targets, has agreed plan
• Operation and net are the same
• Income is the left over money after paying the bills. revenue is the money business makes from sales
• Sale revenue is the money received when selling a product
• Expenses are things that are need to help the business operate
• Having a good budget performance will be monitored keeping an
• Balance sheet shows financial worth and what the company is worth
• Management and budgets provide direction how much money the business needs looks at the teams performance and controls the income and expenditure
• Problems with budgeting takes time in flexibility decision-making don’t look at other options
• Indirect cost help a business run but doesn’t help make a product examples for rent and electricity
• When a gross profit is high and net profit is low the business is failing performance is worse
• Actual variance is much you ended up spending than what you thought your would
• Budgeted less than what they expected to spend
• Favourable when the figures are better than expected revenue profit is higher
• Adverse when the actual figure is worse than what they expected revenue profit is low
• Revenue money that comes from sales
• Cost of sales and cost of buying then selling direct cost of generating revenue
• Gross profit the difference between revenue cost of sales
• Net profit and gross minus expenses
• Gross profit decreases sales revenue will increase good for the business
• Increase profitability advertising products sale promotion discounts increasing customers
• Income statement is a historical record of trading of a business over specific time shows the profit or loss made by business