Which document should reflect the balance between expenditures and income?

Which document should reflect the balance between expenditures and income?

• A. Income statement
• B. Budget report
• C. Cash flow statement
• D. Profit and loss statement

Answer: (B)

The budget report accurately reflects the balance between expenditures and income. A budget report serves as a financial plan that outlines expected income and expenses over a specific period. It helps an organization or individual monitor financial activities and maintain control over available resources, ensuring that expenditures do not exceed income. While an income statement, a cash flow statement, and a profit and loss statement provide valuable financial insights, they serve different purposes. The income statement and profit and loss statement summarize revenues and expenses to determine profit over a period but do not offer a comparative designed planning tool like a budget report. The cash flow statement focuses on the cash inflows and outflows within an organization, detailing liquidity and cash management rather than directly showing the balance between income and expenditures. Thus, the budget report is specifically structured to monitor and balance expenditures against anticipated income, making it the correct choice for this question.

The budget report accurately reflects the balance between expenditures and income. A budget report serves as a financial plan that outlines expected income and expenses over a specific period. It helps an organization or individual monitor financial activities and maintain control over available resources, ensuring that expenditures do not exceed income.

While an income statement, a cash flow statement, and a profit and loss statement provide valuable financial insights, they serve different purposes. The income statement and profit and loss statement summarize revenues and expenses to determine profit over a period but do not offer a comparative designed planning tool like a budget report. The cash flow statement focuses on the cash inflows and outflows within an organization, detailing liquidity and cash management rather than directly showing the balance between income and expenditures.

Thus, the budget report is specifically structured to monitor and balance expenditures against anticipated income, making it the correct choice for this question.