Report on the Budgeted Income Statement for the Period of July 1, 2008, Through June 30, 2009, Coursework Example

Using the consultant’s recommendations a budget of the income statement was made to cover the above stated period and as expected, operations improved. Revenue increased and costs were seen to be reducing. There could be several reasons as to the variances seen when the actual revenues are compared with the budgeted revenues. In a case where the actual revenues are less than the budgeted revenues, the main cause could be due to tax cuts.  Wikipedia (n.d) explains a tax cut as an economic factor that causes a decrease in the income of the tax administrator and in most cases, the government.  On the other hand, tax could also have a positive effect on the revenues in cases where it is an increase due to the strength it impacts on the economy.

For expenses, there is a slight difference in the factors affecting the variance seen while comparing budgeted and actual results. Expenses for instance, are very vulnerable to inflation and deflation. This happens where money loses value within a short period of time. Money budgeted for today will not be able to buy the intended things the next day. It is therefore a very common reason for variances that occur while budgeting for expenses. The other economic factor would be lack of qualified technical knowhow on the trends in the economy. This affects because the officers involved in making the plan need to be well informed to avoid mere mistakes.

These factors therefore need to be looked into carefully for better skills in budgeting so that there can be more accurate results.

Reference

Tax cut-Wikipedia(n.d). Retrieved on 20^TH September, 2009 from http://en.wikipedia.org/wik/Tax_cut