A formal, written statement of expected income and expenses for a future period is known as a

• A. Forecast
• B. Budget
• C. Pro Forma
• D. Plan

Answer: (B)

A budget is a formal written plan that lays out expected income and anticipated expenses for a specific future period. It serves as a blueprint for how resources will be used, helping managers set targets, allocate spending, and monitor actual results against projections. This formal structure and focus on future financials make it the best description for a document that specifies both revenues and costs for a future timeframe.

Other terms touch related ideas but aren’t the same: a forecast is an estimate of what will happen based on trends and assumptions and may be less formal; a pro forma consists of projected financial statements used for analysis or investor presentation rather than a day-to-day management plan; a plan is broader and not necessarily a detailed, formal financial document.