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    Be Specific in Describing The Component Line Items of Each

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    Nana Kweku Asifo Okyere
    The income statement budget is created by estimating revenues, expenses, and profits for a given period. It is an important planning and performance evaluation tool. Revenues are recorded when earned and expenses when incurred using accrual accounting. The budget involves estimating items like sales, cost of goods sold, expenses, and net income. It is developed using other budgets and with input from different levels of the organization, including lower-level employees, using a bottom-up approach. The board approves the budget and monitors actual results against projections.

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    Be Specific in Describing The Component Line Items of Each

    Uploaded by

    Nana Kweku Asifo Okyere
    41 views2 pages
    The income statement budget is created by estimating revenues, expenses, and profits for a given period. It is an important planning and performance evaluation tool. Revenues are recorded when earned and expenses when incurred using accrual accounting. The budget involves estimating items like sales, cost of goods sold, expenses, and net income. It is developed using other budgets and with input from different levels of the organization, including lower-level employees, using a bottom-up approach. The board approves the budget and monitors actual results against projections.

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    discussion assignment unit 5 managerial accounting

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    discussion_Unit_5.docx

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    The income statement budget is created by estimating revenues, expenses, and profits for a given period. It is an important planning and performance evaluation tool. Revenues are recorded when earned and expenses when incurred using accrual accounting. The budget involves estimating items like sales, cost of goods sold, expenses, and net income. It is developed using other budgets and with input from different levels of the organization, including lower-level employees, using a bottom-up approach. The board approves the budget and monitors actual results against projections.

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    41 views2 pages

    Be Specific in Describing The Component Line Items of Each

    Uploaded by

    Nana Kweku Asifo Okyere
    The income statement budget is created by estimating revenues, expenses, and profits for a given period. It is an important planning and performance evaluation tool. Revenues are recorded when earned and expenses when incurred using accrual accounting. The budget involves estimating items like sales, cost of goods sold, expenses, and net income. It is developed using other budgets and with input from different levels of the organization, including lower-level employees, using a bottom-up approach. The board approves the budget and monitors actual results against projections.

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    of 2

    Continuing with the company selected in Unit 2, discuss how the income statement budget

    would be created for a year starting with the sales budget through the SG&A budget. Be sure to:

     Be specific in describing the component line items of each

    Income statement budget; the budgeted income statement is an estimate of the organization’s
    profit for a given budget period. Most organizations, prepare the budgeted income statement
    using the accrual basis of accounting: revenues are recorded when earned and expenses are
    recorded when incurred (Heinsinger & Hole, n.d.)
    The budgeted income statement is perhaps the most carefully scrutinized component of the
    master budget. The management and employees throughout the organization use this information
    for planning purposes and to evaluate company performance (Heinsinger & Hole, n.d.). It is is an
    estimate of the organization’s profit for a given budget period.
    The budgeted income statement can be prepared with the help of other budgets in the manner
    given in explanation after the definitions below
    SG&A budget; the selling and administrative budget is an estimate of all operating costs other
    than production. (Heinsinger & Hole, n.d.)

    line items -

     Sales - This is the amount earned by the company by selling the products that it deals
    in.

     Cost of goods sold - All the direct expenses of materials and labor that are incurred to
    sell the goods of the company form the cost of goods sold.

     Gross margin - It is the difference between the revenue and cost of goods sold.

     Selling, general and administrative expenses - These are all the non-production
    expenses like marketing, depreciation, advertising etc.

     Net operating income - It is the difference between revenue and all necessary
    operating expenses.

     Interest expense - It is the financing expense that the company needs to pay on a
    regular basis.

     Net income - It is the total income earned by the company after deducting all the
    expenses from the total revenue earned.

    This study source was downloaded by 100000811152126 from CourseHero.com on 07-17-2022 13:03:20 GMT -05:00

    https://www.coursehero.com/file/62843819/discussion-Unit-5docx/
     Identify the individuals that would be involved in developing the budgets

    The board of directors and budget committee are responsible for approving the budget and often
    review periodic reports comparing actual net income to budgeted net income to determine if
    profit goals are being achieved (Heinsinger & Hole, n.d.)

    In a company that uses the top-down approach the budget is developed by the top management
    and passed on to the employees. This is the case at SHOBOS NIG. Where I worked.

    Today, successful companies approach budgeting from the bottom up. This requires the
    involvement of various employees within the organization, not just upper management. Lower-
    level employees often know more about their functional areas than upper management, and they
    can be an excellent source of information for budgeting purpose (Heinsinger & Hole, n.d.)

    Reference

    Heisinger, K., & Hoyle, J. B. (n.d.). Accounting for Managers. Retrieved


    from https://2012books.lardbucket.org/books/accounting-for-managers/index.html

    This study source was downloaded by 100000811152126 from CourseHero.com on 07-17-2022 13:03:20 GMT -05:00

    https://www.coursehero.com/file/62843819/discussion-Unit-5docx/
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