You probably will make the analysis of the income statement each month, or at least every few months. This financial information is useful also as a basis for preparing a budget for the coming year; the income statement is the starting point. You adjust the numbers on the historical income statement according to your best estimate of how revenues and expenses will differ in the year ahead.
If your first cut at such an estimate does not indicate that the entity is going to earn a satisfactory income, look at what needs to be done to correct the situation:
Increase advertising and other marketing expenses in order to generate more revenue?
Discontinue any activities not performing satisfactorily?
Find new ways to earn revenue?
The point is that preparing a budget starts our thinking about what, if anything, needs to be done in order to produce a satisfactory income next year, and to take the necessary action ahead of time.
In many entities, managers expect that the historical income statement will “contain no surprises.” The expected results are set forth in the budget and modified according to the manager’s judgment on effect of changes in conditions since preparing the budget. With a well-prepared budget and a good feel for what is currently going on, the financial statements essentially confirm what the manager already knows.
In addition to the budget, you probably will forecast the entity’s need for cash. The basic approach is the same as that already described, but in the annual exercise, you should consider alternatives with longer-run consequences. If the business is seasonal, for example, reviewing the monthly balance sheets may indicate a plan for borrowing in months of peak cash needs and for investing excess cash in other months.
The Budget Report shows budgeted amounts for each account, by period.
Sage 50 Premium Accounting and above: You can show only one budget at a time on the report.
Select the Options button to determine the data criteria for the reports you want to see or print. For this report Sage 50 displays the following filter options:
Dates: You can select to show all periods, this period, a range of periods, or this year. When you select Range, you can specify the periods in the From and To boxes.
Note: This report shows a maximum of four years of data. When choosing a Range, you must select dates that fall within a maximum of four consecutive fiscal years. For example, if your company uses a calendar fiscal year, you can select a range from March 2010 to March 2013, but not from March 2010 to March 2014. The range from March 2010 to March 2013 falls within four consecutive fiscal years (2010, 2011, 2012, and 2013). The range from March 2010 to March 2014 falls within five consecutive fiscal years (2010, 2011, 2012, 2013, and 2014).
Select a filter: First, select a filter on the left. Then, define the options for that filter on the right. The options differ based on the filter selected. Tell me more about the types of filter options.
Budget: Select the budget to display on this report.
Include Accounts with Zero Amounts: If you want the report to show budget figures even for accounts with zero balances, select this check box.
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