1. Financial Budgets Chapter 7 Slides prepared by Peter Miller
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2. Budgeted Income Statement
The Budgeted Income Statement may be prepared after all the previously mentioned budgets have been produced.
Example
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3. Budgeted Income Statement
Solution
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4. Accrual and Cash Accounting
Accrual Accounting
The expenses bad debts and discount allowed are taken up in the period to which the sale is related. This would give a true budgeted net profit result for the period in question.
Cash Accounting
We take up discount allowed and write off bad debts when cash is actually received.
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5. Impact of GST on Financial Budgets
GST arises when goods are bought or sold
GST paid is a current asset
GST collected is a current liability
The difference between the two amounts is calculated and a sum is either owed BY or TO the ATO
GST amounts owed BY the ATO
Are current assets
GST amounts owed TO the ATO
Are current liabilities
GST will not appear in the Income Statement.
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6. Budgeted Balance Sheet as at 30/6/2005
Example
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7. Comprehensive Example Projections for the year ended 30 June 2006
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8. Solution to Comprehensive Example
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10. Slides prepared by Peter Miller ©National Core Accounting Publications

11. Slides prepared by Peter Miller ©National Core Accounting Publications

12. Impact of GST on Operating & Financial Budgets
At the end of a BAS period the difference between the amount of GST collected and any GST paid is offset and the resultant amount will be paid to or collected from the ATO.
The ATO expects settlement within 28 days after the end of a quarter or 21 days after the end of the month.
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13. Budgeted Statement of Cash Flows
Classification of activities
Operating Activities
Investing Activities
Financing Activities
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14. Budgeted Statement of Cash Flows
Example
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15. Budgeted Statement of Cash Flows
Solution
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16. Flexible Budgets & Performance Reports
Next
Chapter 8
Flexible Budgets & Performance Reports
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