Definition:
A budgeted balance sheet is a projected financial statement that shows a company’s expected financial position at a future point in time. It’s based on the company’s budget and forecasts for future income and expenses.
Key components of a budgeted balance sheet:
- Projected assets: The expected value of the company’s assets at the end of the budget period.
- Projected liabilities: The expected amount of the company’s liabilities at the end of the budget period.
- Projected equity: The expected value of the company’s equity at the end of the budget period.
Why are budgeted balance sheets important?
- Financial planning: Budgeted balance sheets are essential for financial planning, as they help companies to forecast their future financial position.
- Decision-making: They can be used to make informed decisions about investments, financing, and other strategic matters.
- Performance evaluation: Budgeted balance sheets can be compared to actual results to assess the effectiveness of the company’s financial planning and management.
In essence, a budgeted balance sheet is a projected financial statement that shows a company’s expected financial position at a future point in time, and it’s a valuable tool for financial planning and decision-making.
