AOF Managerial Accounting Unit 2 Lesson 4 The
- Slides: 7
AOF Managerial Accounting Unit 2, Lesson 4 The Budgeted Income Statement Copyright © 2009– 2016 NAF. All rights reserved.
A business’s income statement is the foundation of budgeting An income statement shows the net income for one fiscal period, usually a year. Revenues Expenses = Net Income What information besides net profits would budget decision makers want to consider?
The comparative income statement compares the two past years’ data Each item is analyzed for increase/ decrease Favorable Unfavorable Neutral Further analyze results to prepare for operational plan
The operational plan states how the company will meet its goals Budget committees: • Consider factors affecting the company • Create goals for the company • Create an operational plan Why can’t all goals fit into an operational plan?
Budget schedules project specific data on a quarterly basis • • Sales budget schedule: Projects net sales • Expenses schedules: o Project selling expenses o Project administrative and other expenses Purchases budget schedule: Projects cost of purchases Budgeted income statement Sales budget schedule Purchases budget schedule Selling expenses budget schedule Other revenue & expenses budget schedule Administrative expenses budget schedule
The budgeted income statement projects annual sales, expenses, and cost of goods sold
Budget variance reports allow comparison between projected and actual results Can a comparative income statement be more useful than a budget variance report? How?
