Making a Budget
Part 2: Large Companies So large companies keep budgets, too. Here is an example: 3-24
$400
3-25
$400
3-26
$400
3-27
$600
3-28
$800
3-29
$800
3-30
$1500
3-31
Salaries $3,000
$1500
3-31
Rent $1,200
3-31
Electricity $800
3-31
Insurance $950
Total
$5,950
$6,400
The toy company earned $6,400 in sales in the last week of March. The company paid out $5,950 in expenses. So, the company made $450 in March, after all expenses are subtracted from income.
Also, if the company has a few more months like March, when income is more than expenses, then the company can plan ahead and save up enough money to buy that computer system using cash, so the company doesn't have to borrow money and eventually pay more money (because a credit card company or a bank that gives a loan or will charge interest). Next page > One Last Thing > Page 1, 2, 3 |
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Why
is it a good idea to know all this? What if the company
wanted to buy a new computer system to calculate store
receipts and that new computer system cost $2,000? If the
company had only $450, then they'd have to buy the computer
system using a credit card or some other method of borrowing
money, like a loan. The company couldn't pay cash because
enough wasn't available (unless the company had money stored
away, which most companies usually do for just such an
occasion).
Social Studies for Kids
copyright 2002–2024
David White