What is a Budgeted Financial Statement?
What is a budgeted financial statement?
A prediction of a business’s financial future
Assets is $1,000, if it decreases by 10% this year, what is the new balance?
$900
Why do companies control costs
Why do companies pan with budgets
to know what they need for the future
How do budgets improve performance
They set clear goals
How is a budgeted income statement different from a normal income statement?
It predicts income and expenses instead of showing what already happened
Assets is $1,200. Liabilities is $400. What is the new equity?
$800
What does comparing budgeted costs to actual costs help you find
Where spending was higher than planned
What does a sales budget help plan
How much the company expects to sell
Why do managers compare results to the budget
To see if the team met expectations
Why do companies compare budgeted statements to actual results
To see where they overspent or underspent
Equity is $15,000. Profit 10% of equity. What is the new equity?
$16,500
How do budgets help reduce waste
They set spending limits
How do budgets help with staffing and production
They show how much work needs to be done
How do budgets help motivate employees
They give targets to work toward
How do budgeted statements help with planning
They show what recources the company will need in the future
Liabilities is $10,000. Decrease 10% annually, what will be the new balance after 2 years
$8100
Why is tracking costs regularly important
It lets managers fix problems before they get worse
Why do companies make cash budgets
To plan for cash shortages or extra cash
It shows what needs to be improved
How do budgeted statements support long term goals
They show if the company is on track financially to reach them
Assets is $50,000. Liabilities is $20,000. Assets increase by 10% this year, and liabilities decrease by 5%. What is the new equity?
$36,000
How do budgets help improve efficiency
They show which areas are costing to much
How do budgets help long term planning
They show if the company can afford future goals
How do budgets help measure success