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Companies also prepare a budgeted balance sheet along with the income statement to understand the plans that are financially feasible.
How to prepare budgeted income statement. Based on the budgeted income statement management sees if the sales goals will be met and if there are any places within the company that expenses can be cut. It becomes important to prepare a budgeted income statement for a business in order to measure the effectiveness of the financial planning process. It is compiled from a number of other budgets the accuracy of which may vary based on the realism of the inputs to the budget model. Management needs to prepare budgeted income statements for the month and the quarter.
To prepare a budget statement of profit and loss the other name for an income statement start by setting revenue goals for the period under consideration. The budgeted income statement contains all of the line items found in a normal income statement except that it is a projection of what the income statement will look like during future budget periods. Importance of budgeted income statement.
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