10.1. Exploring the Reasons for Budgeting
NOTE
The financial statements included in the financial reports of a business are prepared after the fact; they're based on transactions that have already taken place. (I explain business financial statements in Chapters 4, 5, and 6.) Budgeted financial statements, on the other hand, are prepared before the fact and reflect future transactions that are expected to take place based on the business's strategy and financial goals. Note: Budgeted financial statements are not shared outside the business; they are strictly for internal management use.
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Business managers don't just look out the window and come up with budget numbers. Budgeting is not pie-in-the-sky wishful thinking. Business budgeting — to have practical ...
