1. Define the importance of a financial plan (compare to road map).
2. Explain why business owners use a budget. Be sure to refer to budget
variance. What is it and how is it used?
3. Critical Thinking Discuss property ownership and control. How are they related to the accounting
equation?
4. Explain the purpose and components of the three main financial statements of a business.
5. Write the accounting equation, in its entirety. (How does accounting help a business?)
a. Which financial statement outlines the accounting equation?
6. Why might an entrepreneur realize that he or she could not secure any investors after
developing a financial plan (use at least two vocabulary words in your answer)?
7. Critical Thinking If a business buys $4,000 worth of new equipment on credit, which inputs to the
accounting equation are affected? Is the equation still in balance?
Other Study Resources
a. Read Ch. 17
b. You will have to identify accounts and determine the associated financial statement.
c. You will have to complete an income statement and balance sheet.
d. Review all of the notes in the blue packet