Budgeted Financial Statements
Each of the budgets presented thus far are important in their own right. They will guide numerous operating decisions about raw materials acquisition, staffing, and so forth. It is essential that all of these individual budgets be drawn together into a set of reports that provides for outcome assessments. This part of the budgeting process will result in the development of pro forma financial statements. The budgeted Income Statements for ACT-On Retail and ACT-On Frozen Delights were illustrated previously. General templates for the creation of the major financial statements is reflected below:
Companies normally have a minimum desired cash ending balance. If the cash for a given quarter. Is less than the desired minimum balance, the company will borrow the amount necessary to meet the minimum. This borrowing will be shown in the financing section. In following periods where the Cash surplus for a quarter. exceeds the minimum balance requirement, the excess funds can be repaid on the loan along with any accrued interest.
Source: principlesofaccounting.com, Larry M. Walther, Copyright 2016.
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