Budgeted income statement

Definition

A budgeted income statement is a financial report that estimates the expected revenues, expenses, and profits for a future period based on the operating budgets. It helps organizations plan their activities and manage resources efficiently.

5 Must Know Facts For Your Next Test

1. It incorporates data from the sales budget, production budget, and other operating budgets.
2. The primary purpose is to predict profitability and assess financial performance for a specific period.
3. It aids in making strategic decisions by providing a forecast of net income.
4. Adjustments can be made to other budgets if the projected results are not satisfactory.
5. It serves as a benchmark for comparing actual performance against budgeted figures.

Review Questions

• What information is included in a budgeted income statement?
• How does a budgeted income statement help in strategic decision-making?
• Why is it important to compare actual performance with the budgeted income statement?

Related terms

Operating Budget: A detailed projection of all estimated income and expenses based on forecasted sales revenue during a certain period.

Sales Budget: An estimate of expected sales revenue over a specific period, forming the basis for other budgets.

Production Budget: A financial plan indicating the number of units that must be produced to meet sales goals and ending inventory requirements.