A budgeted income statement is a projection or representation of a normal income statement with respect to the representation of income statement with future budgets. The budgeted income statement is derived from a number of other budgets and the degree of accuracy of the income statement depends upon the accuracy and authenticity of the figures of the budgets from which the income statement is derived. Budgeted income statement is quite beneficial in terms as it helps managers and decision makers to realize whether the financial projections of a company are appropriate and reasonable. It can be used along with combination budgeted balance sheet to help the management to eliminate those processes and budget assumptions that don’t prove to be beneficial to the company.
A budgeted income statement can be shown as under:-
Mostly budgeted income statement is prepared for large and financially complex companies and firms.
Budgeted income statement of ABC Company
Budgeted Income Statement
Year ended December 31, 2013
|Less: Cost of goods sold
||Cost in ending FG X Ending inventory x Sales budget Unit
|Less: Administrative Expense
|Net Operating Income
|Less: Interest Expense
It is advised to present budgeted income statement for all the budget periods at the same time as this will help in comparing the results of different budgeted periods and will help management to take decisions on the biases of this information.
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