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27 Balance Sheet Managing Budgets Where each line item on the budget is in comparison to what you budgeted for it. For example, if
you want to know how much you’ve spent on employee training at this point in the year and
whether or not you have enough left in the account to send an employee to a conference, you’d
need to look at the ledger account for training, or at a year-to-date view of the budget. Download free ebooks at bookboon.com
28 The Income Statement Managing Budgets 5. The Income Statement
During the fiscal year, any organization will have changes in its finances. The changes could be positive
or they could be negative. But the senior management of an organization will want to know the answers to
questions like: How well are we doing financially? Are we earning a profit? Are we running at a loss? How is our profit in comparison to the competition? Are we likely to continue earning profit? The budget might give you a clue to some of these questions, because if you see that the amount spent on
every line item is so high that you’re about to exhaust your funds, that’s a bad sign. But to answer these
and similar questions, you can get better information from an Income Statement. 5.2 Elements of the Income Statement
Whereas the Balance Sheet offers a snapshot of an organization’s finances at one given point in time, the
Income Statement looks at incoming revenue and outgoing expenses over a period of time. For the Income
Statement we use the following definitions: Revenue – incoming assets in return for sold goods or services (cash or accounts receivable, for
example). Expenses – outgo...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.
- Fall '13