Budgeted Income Statement

What is a Budgeted Income Statement?

A budgeted income statement is an income statement based on budgeted expectations – not actual results. 

How it Works

A business’s management will review current performance. 

Based upon this, they will lay out projections in a series of operational budgets. 

When making projections, management will consider such things as expected sales growth and associated costs. 

They will also make assumptions about likely operational and administrative expenses. 

Even financing costs are taken into consideration. 

Once the operations budgets have been formulated, management will lay out a budgeted income statement as part of a master plan. 

Management use the budgeted income statement in tandem with the budgeted balance sheet to make sure the projections are in line with the business’s long term aims. 

For example, operational budgets may set out plans for income expansion. 

However, other considerations may make the projections unacceptable.