A budget is a quantitative expression of a proposed plan of action by management for a given time period. Essentially, it is a plan for how an organization will obtain and use resources. The budget is charting the course for the organization. The purposes of budgeting are planning (goal-setting) and control (ensuring the company moves towards the goals).

The master budget summarizes all the financial and non-financial plans into a single document. The master budget is an aggregation of a series of lower-level budgets produced by a companys various functional areas. These lower level budgets include, but are not limited to, the direct materials cost budget, the revenues budget and the budgeted income statement.

An income statement reports a companys earnings and expenses for a specific period of time, typically by the month, quarter or year. A budgeted income statement is a predicted income statement for a future period of time. It is also called a pro forma income statement.

the following:

1. Select one publicly traded company, such as Microsoft, Amazon or Apple. It can be one of these 3 or a different one. Provide a summary of the companys business.

2. Examine the income statement of the publicly traded company. Then, create a budgeted income statement for the coming year.

a. Note that the budgeted income statement should include the following: net sales, cost of goods sold, gross margin, selling and administration expenses, net operating income, interest expense (if any) and net income.

Note: Other templates of budgeted income statements may include alternate line items. Students should adapt their budgeted income statement to best suit the company they selected. For the purposes of this assignment, there should be approximately 7 13 line items.

A good website explaining how to create a budgeted income statement is found at the following link: https://www.accountingtools.com/articles/2017/5/17/budgeted-income-statement

Other budgets that comprise the master budget (other than the budgeted income statement) do not need to be created.

3. In creating the budgeted income statement, students will need to make assumptions regarding the companys performance in the coming year. Explain why the assumptions were reasonable for the company that was selected.