Which of the following is a formal statement of a company's plans in dollars?

• A. Statement of Cash Flows
• B. Budget
• C. Income Statement
• D. Balance Sheet

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the question. The problem is asking for the formal statement of a company's plans expressed in dollars. This requires identifying the financial document that outlines planned revenues, expenses, and other financial activities.
2. Step 2: Review the options provided: Statement of Cash Flows, Budget, Income Statement, and Balance Sheet. Each of these documents serves a specific purpose in financial accounting.
3. Step 3: Clarify the concept of a 'Budget.' A budget is a formal financial plan that estimates future revenues, expenses, and cash flows. It is used by companies to allocate resources and set financial goals.
4. Step 4: Compare the other options: The Statement of Cash Flows shows actual cash inflows and outflows, the Income Statement reports actual revenues and expenses, and the Balance Sheet provides a snapshot of a company's financial position at a specific point in time. None of these are forward-looking plans expressed in dollars.
5. Step 5: Conclude that the correct answer is 'Budget,' as it is the formal statement of a company's plans in dollars, used for planning and decision-making purposes.