Budgeted balance sheet

Definition

A budgeted balance sheet is a financial statement that projects a company's financial position at the end of a future period. It includes estimated amounts for assets, liabilities, and equity based on anticipated transactions and budgets.

5 Must Know Facts For Your Next Test

1. It integrates data from various component budgets such as sales, production, and cash budgets.
2. Helps in evaluating whether the company will meet its financial goals and maintain desired liquidity.
3. Essential for planning long-term investments and financing needs.
4. Requires accurate forecasting of revenue, expenses, and other financial activities.
5. Often used by management to identify potential financial issues before they occur.

Review Questions

• What components are necessary to prepare a budgeted balance sheet?
• How does a budgeted balance sheet help in strategic decision-making?
• Why is it important to accurately forecast revenue and expenses when preparing a budgeted balance sheet?

Related terms

Master Budget: A comprehensive financial plan that includes all individual budgets related to sales, production, distribution, and finance.

Cash Budget: A detailed plan showing how cash resources will be acquired and used over a specific time period.

Pro Forma Financial Statements: Projected or estimated financial statements that show how the actual statements will look if certain assumptions hold true.