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Chapter 3 - Budgets

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  • What is a budget deficit?
    When expenditure is greater than income.
  • Who uses budgets?
    Individuals, households, and governments.
  • Formula for closing cash?
    Opening Cash + Net Cash
  • What two main elements make up a budget?
    Income and Expenditure
  • What can a household do to fix a deficit?
    Reduce spending or increase income.
  • What is a budget?
    A financial plan showing expected income and spending.
  • If expenditure > income, what does this show?
    A deficit.
  • Define closing cash.
    Money left at the end of the period.
  • What does net cash mean?
    Difference between income and expenditure.
  • If opening cash €100 and net cash €50 → closing cash = ?
    €150
  • Name the three types of expenditure in a budget.
    Fixed, Irregular, Discretionary.
  • Define opening cash.
    Money at start of the period.
  • If income €2,500, expenditure €2,000 → net cash = ?.
    €500 surplus
  • Give one benefit of budgeting.
    Helps avoid overspending.
  • What is a budget surplus?
    When income is greater than expenditure.
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