How To Read A Budget Income Statement

Due to several higher than expected costs the net income line came in at a small loss instead of the expected net income of 2 104.

How to read a budget income statement. The income statement presents a summary of the revenues gains expenses losses and net income or net loss of an entity for the period. The budgeted or pro forma income statement is prepared after the operating budgets have been completed. 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. This way it becomes easy to compare the results of all periods and also identify anomalies.

Maintenance and repair expenses were 240 over budget or 34 29 higher than expected. To make it easier the number of line items in a budgeted income statement should be similar to the ones in the actual income statement. Meanwhile equipment rental was only 37 over budget but that was a whopping 49 33 higher than expected. The second is that an income statement is based on a few very simple concepts which you already understand.

The income statement also known as the profit and loss p l statement is the financial statement that depicts the revenues expenses and net income generated by an organization over a specific. 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. This statement is similar to a moving picture of the entity s operations during the time period specified. A budgeted income statement is most useful when it represents all budget periods in one report.