The same business activity gets reported three different ways: profit in the income statement, balance sheet position, and actual cash. They tell different stories but must reconcile to the same underlying reality. Drag the slider to add transactions and watch how each statement responds.
Statement Flow
Month 0
Watch how transactions flow through all three statements
Starting position
Month 0Month 6Month 12
Net Profit
$0
Cash Balance
$50,000
The budgeted income statement aggregates all revenue and expense budgets using accrual accounting to show expected profit. Revenue comes from the sales budget, cost of goods sold from the COGS budget, and operating expenses from departmental expense budgets. The result is net profit before tax, which flows to equity in the balance sheet. This statement ignores timing of cash — it records transactions when earned or incurred, not when cash changes hands. A business can show strong profit while running out of cash if customers pay slowly or inventory ties up funds.
Know This
The budgeted cash flow statement converts accrual-based profit into anticipated cash movements by adjusting for non-cash items like depreciation, changes in working capital from receivables and payables, and all investing and financing activities.