FIN 101 Lecture 1: Review And Keep All Your Receipts

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periwinklemammoth360

10 Aug 2020

School

Ball State University

Department

Finance

Course

FIN 101

Professor

Olga S Mc Atee

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Document Summary

Reviewing and keeping your receipts can save you a lot of money over the years. Even though it sounds easy, it"s more difficult than you might think. A lot of people throw low-ticket receipt away without looking at it. They look at high-ticket receipts but throw them out either later in the day or later in the month. You should quickly review low ticket receipts and put them in a monthly receipt file that you throw away at the end of every month. You can save at least on mistakes over the course of a year. High-ticket receipts and credit card statements are different. File credit card statements away and look at them every year to analyze spending habits you may have. By analyzing the receipts, you can see where you can reduce your spending. This only takes about an hour per year, so do it! Products or services that cost or more.

Related Questions

Find an article dealing with budgeting and prepare a 1 page summary of how you can apply the information to your personal finances.

ARTICLE:

Budgeting is the foundation of personal finance. Whether or not you write a personal budget, use a budget spreadsheet, use a budgeting app, or simply keep track in your head â youâre probably already budgeting.

And budgeting is never more important than in your early adult life as you figure out how to stretch a paycheck, pay off debt, and â hopefully â save a little bit, too.

This page will give you the basic tools youâll need to start budgeting.

What is a Budget, Exactly?

A monthly budget is a plan for how you will allocate income to meet your expenses for a designated month. Some think of budgets as spending constraints, but budgets are better described as âspending plansâ. If you budget correctly you will be able to spend money on things you enjoy without worrying about meeting other financial obligations, overdrawing your accounts, or going into credit card debt.

A monthly budget typically consists of a list describing your income sources and expenses. Each description is followed by the amount you project for the amount of the income or expense for the designated month. A monthly budget can be an Excel spreadsheet, managed within a software program like Quicken, or simply jotted on a piece of notebook paper.

Writing Your Budget

A monthly budget is an estimate, but your goal should be to make as educated an estimate as possible. To do this, you will want to collect a monthâs worth of pay stubs, bills, and bank statements, if possible.

INCOME

Assuming you are budgeting for an upcoming calendar month, start by looking at your previous monthâs take-home pay.

If you are paid monthly or semi-monthly, this will be easy.

If you are paid every other week, multiply your paycheck by 2.166 to determine your monthly pay.

Paid weekly? Multiply your check amounts by 4.333.

Budgeting is a bit trickier if your main source of monthly income varies (if you work variable hours or earn tips), you can average several months of income or estimate based upon experience. But be conservative. In a monthâs time you want to have spent less than you planned for in your budgetâa difficult goal when you donât bank as much cash as you thought.

You also want to take other income sources into account.

Do you work more than one job?

Will you get a bonus next month?

Do you pick up odd gigs or sell old stuff from time to time?

Do you have any investments paying dividends?

Create entries in your monthly budget for these additional income sources and create a line for your total monthly income. This is the amount you have to spend for the month and the basis for your âspending planâ. You cannot spend more than this in any one month. If you anticipate unusually large expenses next month for which you have money saved (a vacation, for example), consider including the savings you will use to pay for the expense as income. This will allow you to see a more typical monthly spending plan despite the inclusion of a non-monthly expense.

EXPENSES

For your monthly budget to work, your expense projections need to be as accurate as possible. Some expenses, like your rent, car payment, and insurance bill, are simple. From there, it gets trickier.

Chances are your utility bills fluctuate from month to month and how much you spend on groceries, dining out, and clothing may vary drastically. Hereâs where having a few bills and bank statements will be useful so you can average several monthâs worth of data.

Place each expense on a line and write down the amount next to it. You may find it useful to create categories of expenses like:

âTransportationâ

âHouseholdâ

âFoodâ

âEntertainmentâ

âDebtâ

Consider expenses that may not be monthly, such as clothing or car maintenance. You should still budget for these items. If you allocate money every month for these things, that money will be available when you do need it.

Tracking and estimating your monthly expenses will be harder, but not impossible, if you frequently pay in cash. While cash is a good way to moderate your spending, you need to be diligent about collecting receipts if you want to know where your money went. A new benefit of credit and debit cards now that you can use them virtually everywhere, even for micro payments of just a few dollars, is at the end of the month you get a statement with all of your monthly expenses on one page. If youâre struggling with credit card debt, definitely stick with debit cards or cash. But if you can learn to use a credit card responsibly and pay it off in full each month, I actually think a good credit card can make budgeting easier.

Your Bottom Line

When you have a complete list of your monthly expenses, add them up and subtract the sum from your monthly income. You should have a positive number. No? Uh-oh. If you have been spending according to this budget, you are going into debt. You will need to find out why your expenses exceed your income and find ways to cut your expenses â fast! Look at your list of expenses and separate discretionary spending. This includes entertainment, travel, gifts, and all dining (including lunches!) Most people can cut their monthly expenses significantly by learning to give up small daily expenditures like coffee or snacks.

If your budgeted expenses fall below your income, congratulations! You are successfully living below your means. The question, now, is how to use your extra money. Follow our six steps to financial stability to help you prioritize your money goals.

Finally, Keep It Simple

If you ever want to build wealth and stay out of debt, you have to spend less than you earn. And a budget can ensure that you do that. Still, rigidly tracking every dime you spend is like counting calories â it sounds good in theory, but most of us fail to keep up with it.

But you can stick with a budget if:

You keep your budget as simple as possible.

You harness the power of automating your money.

After you get a handle on your budget, youâll be able to focus on other priorities like getting out of debt, building emergency savings, and begin to save for retirement. They arenât the most exciting financial goals of your lifetime, but once they are out of the way they provide solid footing for financial security for the rest of your life.

Read more at: https://www.moneyunder30.com/budgeting-in-your-twenties

magentadeer293

You are doing a walk-through of the credit and collections function to get an idea of what internal controls exist and where there might be weaknesses. Then, after you finish, you or another member of the audit team will be testing the system to determine whether the internal controls actually exist and actually work as you have been told. In the meantime, keep your eyes, ears, and mind open for any weaknesses in internal control.

The department head of the credit and collections department is telling you how things work in the department. "Jenny, here, receives the mail and distributes it to the various collectors. They each open their own mail. There is a lot of correspondence going back and forth to and from customers, so it is easier if each collector just handles her own mail." It is easy for Jenny to distribute the mail because most of the letters are addressed to a specific individual.

You watch as one of the individuals opens the mail and handles the items inside. Many of the items are disputes-the customer says the items billed were not ordered, or, if ordered, were not received. Every such letter results in the disputed bill being written off. As the department head explains, the vice president of sales told him, a few years ago, that too many customers were complaining that the credit department was too tough on them, so he had decided that rather than have any more complaints, every such bill would be written off. The procedure is that the collector initiates a form, called a write-off form, to write off a particular amount from a customer's balance. In the explanation block, the collector simply writes "customer dispute." This form is signed by the collector, sent to accounting, and accounting processes the forms each Wednesday. There are so many letters with so many disputes that the department has a monthly competition for the most unusual letters, which are tacked up on a bulletin board. All the rest of the dispute letters are thrown away as soon as the collector has filled out the write-off form.

Collectors also receive checks in the mail. These are payments from customers whose accounts are wholly or partly overdue. As one of the collectors explains, they each receive a print-out once a month, so if the customer sends in a payment, there is no way for the collector to find out about it before the next month's print-out arrives unless the collector receives the payment. Most of the collectors process dozens of payments each month. They make whatever notations they need on the monthly print-out, prepare a deposit ticket, send the department's runner to the bank each Friday (collections are accumulated until Friday, with the customers' payments being held in an otherwise empty desk drawer until then), and send the receipted deposit ticket on to the department which records collections of cash. The credit and collections department also sends a listing of which customers to credit for having paid all or part of their balances.

Near the end of each fiscal quarter, the corporate controller gets a preliminary set of financial statements, and then he tells the department head by telephone how much the department is allowed to write off in bad debts. Thus, the company writes off bad debts only in the third month of each fiscal quarter. "Why does he tell you by telephone?" you ask of the credit and collections manager. "He doesn't want any written record of it," is the reply.

You are interested in how the department decides which customer balances to write off as uncollectible and which to leave on the books. "We write off the oldest ones, up to the amount of what we have been told we can write off," says the credit and collections manager. "That way, our percentage of bad debts always comes out pretty much in line with what we have done before, and the auditors have always been satisfied with it. They had read some academic articles from some people who recommended using time-series analysis to see if the numbers were correct, so they test the accounts receivable account and satisfy themselves that the sales and receivables are real, but they always test the write-offs and bad debts expense simply by using the time-series analysis recommended by the accountants with those fancy doctorates. Go ask the guy who ran the audit last year."

You inspect the process by which customer payments are received the regular way, which is done in a different department. The company has a special Post Office box set up. Twice a day, some one person from maintenance goes to the Post Office to pick up the mail, including the customer payments received at this special Post Office box. It is not always the same person from maintenance who goes to the Post Office; whoever is available when the department head looks around is typically the one who is sent.

When the person returns from the Post Office, he brings a bunch of mail to the cash receipts department, where the mail is opened and customers' checks are paperclipped to the envelopes they came in. One of the goals of the cash receipts department is to get the customer payments deposited promptly, so after all the checks are paper-clipped, someone from the department goes to the bank, fills out a whole bunch of deposit slips, deposits those checks, and comes back to the department with those receipted deposit slips. Then the department members try to figure out which customer paid which amounts. They are helped by the routing number on the checks, but those routing numbers represent banks, not customers, and multiple customers use the same banks. Consequently, they refer to a listing of routing numbers to identify the banks, then to a listing of banks to see which customers use those banks, and then to another copy of the same monthly print-out used in credit and collections to figure out which of the customers who use that bank must have paid that particular amount. If they cannot make a good guess, they call some of the customers to ask if they are the ones who paid the amount. Once they think they know who paid the amount, they generate a journal entry to debit cash and credit the customer's account; the credit to the customer's account is automatically also a credit to accounts receivable. Since they have a copy of the monthly printout of accounts receivable, when a customer's payment is not for the full amount of an invoice, they just go ahead and adjust that customer's account so the full amount of the invoice is taken off the customer's account. They say they are creating a lot of goodwill with customers that way.

a. What internal control weaknesses do you see in this system?

b. What are the potential effects of these weaknesses?

c. What do you recommend instead (that is, if you have such a recommendation)?

skycricket458

Explain how the value chain paradigm helps stakeholders to improve the operational efficiency and effectiveness of the organisation. Draw a daigram input-output framework and describe how the case study illustrates its value chain paradigm based on the input output framework.

âI think the waiter wrote in an extra $25 tip on my Sunshine CafÃ© bill after I received and signed my credit card receipt,â Mr. Mark Otter said to the restaurant manager, Brad Gladiolus. âMr. Otter, mail me a copy of the restaurant receipt and Iâll investigate,â responded Mr. Gladiolus. âI donât have the receiptâI lost itâbut I have my monthly credit card statement,â replied Mr. Otter. Mr. Gladiolus hesitated, then said, âMr. Otter, I donât see any way to investigate your claim, so thereâs nothing I can do.â

Mr. Gladiolus sat down at his desk and sketched out possible causes of this service upset as follows:

The customer is responsible for adding the bill and tipping properly, writing legibly, retaining the second receipt, and drinking alcohol responsibly.

The employee is responsible for typing the bill in the register/computer correctly, going back to the customer if the tip is unreadable and verifying the correct amount, and being honest.

The restaurant manager is responsible for investigating the storeâs receipt history and finding this transaction; auditing the source of the error if possible, such as a mistyped decimal or extra zero; and contacting the credit card company and customer to resolve the issue.

The credit card company, a third-party provider in this value chain, is responsible for providing records of the electronic transaction, helping resolve the issue, and issuing a debit or credit to the customer and/or restaurant if needed.

Company Background

Abby Martinâs parents came to Florida from Chicago in the 1960s. Her parents bought land in the Cape Coral area. Later they opened a hotel on Fort Myers Beach, and Abby was part of the housekeeping staff, her first job. By 17, she was running the hotel on her own. Today, she owns and operates six restaurants and a by-the-sea hotel. The restaurants are located in shopping centers next to high-traffic facilities such as movie theaters, groups of retail stores, and other clusters of restaurants. Abby uses four different restaurant concepts (i.e., facility dÃ©cor, size, and layout; prices, menus; music and bands; wine list, lounge areas, etc.) for these six restaurants, depending on the location and local market demographics.

Abby has other investments but loves the challenge of managing restaurants. âI have a great passion for finding a need and meeting it,â she said. âThe secret to our restaurant success is customizing the business to local needs and being very consistent. Offer good food and service at the most reasonable price you can afford. And know that even if you offer all those things you can still fail. The hospitality business is the hardest business, period. You can never sit back and coast.â

In her spare time, she is a prominent community figure involved in activities such as helping build the Ronald McDonald House, fund-raising for the hospital cancer foundation, and serving as chairperson of the local board for the Salvation Army. She likes the Salvation Army because it runs a lean operation, with only six cents spent on management for every one dollar in donations.

Day-to-Day Service Management

Sunshine restaurants are normally open seven days a week from 11 a.m. to 10 p.m. Lunch prices are in the $10 to $20 range and include such entrees as a wood-grilled hamburger, seafood salad croissant, and sesame-crusted yellow fin tuna. Dinner prices range from $20 to $30 per person and include dishes such as shrimp and scallop scampi, red snapper picatta, and wood-grilled filet mignon. Each restaurant keeps about 20 to 30 popular wines in stock, such as a Cakebread Chardonnay. Wine, liquor, and some food items are ordered in bulk to take advantage of volume-price discounts and shipped directly from the suppliers to individual restaurants. All other items are ordered by the restaurant chef and general manager for each unique restaurant.

Abby, like most entrepreneurs, has her own approach to quality control. She notes that âI visit my restaurants every few days, and as I walk in I immediately begin to watch customer faces and behaviors. I try to see if they are happy, talking, smiling, and enjoying the food and surroundings. I look at their posture and facial expressions. I often talk with customers and ask if everything was to their liking. I ask my employeesâwaiters, bartenders, kitchen help, managers, and chefâif they have encountered any problems or service breakdowns. I look for untidy floors, tables, and restrooms. I try to learn from negative customer comments or complaints. My employees know that I will try to help them solve any problemâthey trust me. I take the pulse of the restaurant in a short visit. I meet weekly with the restaurant chefs. I manage quality by observation and close contact with all of the people in the restaurant. At night I go over the financials and sales data.â

A typical Sunshine restaurant has a core staff of about 12 employees, consisting of a manager, an assistant manager, chef, assistant chef, four waiters, two bartenders, and two helpers in the kitchen. During peak season each restaurant hires about six to eight additional employees. Peak demand is when the âsnow-birdsâ arrive in southwest Florida from November to April. During peak demand, the populations of Lee and Collier counties double to almost 2 million people.

Abbyâs entrepreneurial approach to managing the business results in about one negative customer complaint per 100 customer comments. The complaints are nearly equal in focusing on food or service quality. Contribution to profit and overhead per restaurant is 35 percent. The typical customer averages one visit every two months, and the customer defection rate is in the 5 to 10 percent range, but is difficult to estimate given the seasonal nature of the business.

Long-Term Strategic Issues

Abby Martin has established a reputation in southwest Florida for superior service and food quality in her restaurants. She was considering expanding her restaurants to the Tampa and Orlando areas to leverage her expertise and grow the business for the family. She wondered whether she could maintain the proper financial and quality controls with more restaurants and whether to franchise or not. Due to the 2007â2009 credit crunch and high foreclosure rates, there were plenty of commercial properties in good locations for restaurants, and prices were at all-time lows. Abby thought it was now or never in terms of expanding up and down the west coast of Florida. She envisioned as many as 20 Sunshine restaurants in the next five years.

Decisions

Abby wondered when she would ever get the time to analyze these issues. It was not easy keeping up with her businesses. She knew that superior day-to-day food and service quality determines repeat business, so she had to successfully resolve this customer complaint about the waiter adding a $25 tip, while trying to plan for the future. She happened to be at her hotel, so she sat down in a beach chair and watched the brilliant colors of a sunset over the Gulf of Mexico. She began to write down a number of questions she had to answer soon.

FIN 101 Lecture 1: Review And Keep All Your Receipts

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