Budgeted income statement refers to a predicted result income statement that has been prepared in prior to a particular period of time such a year, quarter, or month. It basically gives the predicted outcome about the expenses and incomes of the business. For instance, it can be used in checking the assumptions and predictions one has made in the sales, direct labor, materials, and overhead. Just like the cash budget, it is likely to predict a loss and take it to the master budget for new considerations (Robert et al, 2017). Its main components include including income, gross profit, costs of all the goods sold, depreciation, operating expenses, taxes, net incomes before and after taxes, and actual income statement.
Key stakeholders in the process of budgeting include banks, investors and creditors. Basically, key stakeholders refer to those who have vested interests in the actions of the company but may not necessarily be key decision makers in the company. They all have different roles depending on the circumstances and the type of the project for the company (Argenti, 2018). Therefore, there is a need to ensure participation of the stakeholders in the budgeting process, and ensuring that they have access to correct, timely and adequate information. This ensures accountability and transparency in the budgeting process.
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There are key assumptions for planning such as incomes and the costs that the company is more likely to incur or earn in a particular duration. Basically, the business must produce a service or good that consumers will be interested in, and the business must be able to make profits from the sales of such services. Such assumptions can only be realized through thorough data and deep research.
References
Robèrt, K. H., Borén, S., Ny, H., & Broman, G. (2017). A Strategic Approach To Sustainable Transport System Development-Part 1: Attempting A Generic Community Planning Process Model. Journal of cleaner production, 140, 53-61.
Argenti, J. (2018). Practical Corporate Planning. Routledge.
