Budgeted Income Statement

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

ABC Company

Budgeted Income Statement

Year ended December 31, 2013

Line Items Source Budget Amount
Net Sales Sales Budget $10,000, 000
Less: Cost of goods sold Cost in ending FG X Ending inventory x Sales budget Unit 6,500,000
Gross Margin   3,500,000
Less: Administrative Expense Expense Budget 3,2500,000
Net Operating Income   250,000
Less: Interest Expense Finance Budget 75,000
Net Income   $175,000


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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