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Budgeting & Forecasting › The Master Budget

How is the budgeted balance sheet prepared?

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Answer

The budgeted balance sheet projects the period-end financial position by taking the opening balance sheet and applying the budgeted changes: profit adds to retained earnings, the cash budget gives closing cash, receivables/payables come from sales/purchase timing, inventory from the inventory budgets, and non-current assets from the capital budget less depreciation. It must balance (assets = liabilities + equity).
Real-world example Closing cash, receivables, inventory, assets, and retained earnings are each derived from the supporting budgets.

Common follow-ups: Which budget gives closing cash? | How does profit affect it?