Profit and Loss Statement (Actual vs Budget) — Complete User Guide — Two Accounts Web

Comprehensive guide for comparing actual financial performance against budgeted targets — measuring variance, analysing percentage completion, and tracking financial discipline

Table of Contents

1. What Is the Actual vs Budget Report?
   • Purpose and Benefits
   • The Four Columns
2. Enabling from the Customize Menu
3. Field-by-Field Guide
   • Report Header Fields
   • Budget Line Items
   • Report Footer
4. Settings Configuration
   • Forecasts — Recurring Templates
   • Creating Budgets from Forecasts
   • Manual Budget Entry
5. Creating an Actual vs Budget Report
6. How the Report Is Calculated
   • How Actual Amounts Are Calculated
   • How Budget Amounts Are Retrieved
   • How Variance (Remaining) Is Calculated
   • How Variance Percentage Is Calculated
   • The P&L Layout
7. Drill-Down Capabilities
8. Sample Data and Report Output
   • Sample Setup
   • Actual vs Budget Report Output
   • Verification of Calculation
9. Common Issues and Solutions
10. Accounting Regulation Compliance

1. What Is the Actual vs Budget Report?

The Profit and Loss Statement (Actual vs Budget) is a variance analysis report that compares your actual financial results against planned budget targets for the same period. It helps you understand where your business is performing better or worse than expected, and by how much.

Unlike the standard Profit and Loss Statement (which shows only actual results), this report adds budget columns so you can see at a glance whether revenue targets are being met and whether expenses are under control.

1.1 Purpose and Benefits

• Performance monitoring — track whether the business is on track to meet its financial goals
• Cost control — identify expense categories that are over budget before they become a problem
• Revenue analysis — see which revenue streams are exceeding or falling short of targets
• Informed decision-making — use variance data to adjust operations, pricing, or spending
• Accountability — hold division managers responsible for budget adherence

1.2 The Four Columns

2. Enabling from the Customize Menu

The Profit and Loss Statement (Actual vs Budget) report is a standard report — it is always available under:

• Reports → Financial Statements → Profit & Loss Statement (Actual vs Budget)

No toggle in Customize Menu is needed to enable it.

Related settings:

3. Field-by-Field Guide

3.1 Report Header Fields

Location: Reports → Financial Statements → Profit & Loss Statement (Actual vs Budget) → New Report

3.2 Budget Line Items

The budget is entered as a list of line items, each linking a P&L account to a budgeted amount:

How to Add Budget Lines

1. Click Add to add a new budget line
2. Select the Account from the dropdown (e.g. "Sales Revenue", "Salary Expense")
3. Enter the Amount (e.g. "500000" for a target of 500,000)
4. Repeat for each income and expense account you want to budget
5. Accounts not added as budget lines will show Budget = 0 and 0% in the report

3.3 Report Footer

The Footer field accepts multi-line text. Common uses include:

• Assumptions underlying the budget (e.g. "Budget assumes 10% growth over prior year")
• Disclaimers about variance analysis
• Currency references
• Date of budget preparation

4. Settings Configuration

4.1 Forecasts — Recurring Templates

Location: Settings → Forecasts

Forecasts are recurring transaction templates that can be used to generate projected financial data. While they are primarily designed for generating forecast P&L statements, they also serve as a convenient source for creating budget data.

Forecast Lines (per entry):

4.2 Creating Budgets from Forecasts

The most efficient way to create budget data is through the Forecast P&L Statement:

1. Set up Forecast entries in Settings → Forecasts for your expected revenue and expense streams
2. Go to Reports → Financial Statements → Forecast Profit and Loss Statement
3. Create a forecast report with your desired period
4. The report generates showing projected amounts for each P&L account
5. Click the "Copy to budget" button at the bottom of the forecast report
6. A new Profit and Loss Statement (Actual vs Budget) report is pre-populated with:
   • The same date range as your forecast period
   • Budget line items populated with the forecast amounts for each account
7. Review and adjust the budget amounts as needed, then save

4.3 Manual Budget Entry

You can also enter budget amounts manually without using forecasts. When creating a new Actual vs Budget report:

1. Add budget lines one by one using the Add button
2. Select the P&L account (e.g. "Sales Revenue")
3. Enter the target amount for the period (e.g. "500000")
4. Repeat for each account you want to budget

5. Creating an Actual vs Budget Report

1. Go to Reports → Financial Statements → Profit & Loss Statement (Actual vs Budget)
2. Click New Report
3. Enter a Title (optional, e.g. "Q1 2026 Budget vs Actual")
4. Enter the From Date and To Date for the period
5. Choose the Accounting Method — Accrual or Cash Basis
6. Optionally select a Division for segmented reporting
7. Add Budget Lines — click Add for each account you want to budget:
   • Select the P&L Account
   • Enter the Budget Amount (always positive)
8. Optionally check Exclude Zero Balances and Round Decimals
9. Optionally enter a Footer note
10. Click Save
11. The report generates showing Actual | Budget | % | Remaining for every P&L account in your chart of accounts

6. How the Report Is Calculated

6.1 How Actual Amounts Are Calculated

The Actual column uses the same calculation as the standard Profit and Loss Statement:

Step 1 — Load all General Ledger transactions
Step 2 — Calculate Cost of Goods Sold from inventory layers
Step 3 — Generate fixed asset disposal entries
Step 4 — Generate intangible asset disposal entries
Step 5 — Calculate realised investment gains/losses
Step 6 — Revalue foreign currency accounts for the period
Step 7 — If Cash Basis: match invoices to receipts/payments and convert to cash
Step 8 — Filter transactions where:
         • The account is a P&L (Profit and Loss) account
         • The date is between From Date and To Date
         • (Optional) The Division matches the selected division
Step 9 — Group by P&L account and sum the base currency amounts
Step 10 — Negate the result (since GL stores income as negative credits)

Formula:

Actual Amount = −(Sum of base currency amount for all qualifying transactions)

Income accounts (credit-normal) have negative base amounts in the GL — after negation they become positive. Expense accounts (debit-normal) have positive base amounts — after negation they become negative, which is why they appear subtracted in the P&L layout.

6.2 How Budget Amounts Are Retrieved

Budget amounts are stored directly on the report as an array of line items. Each line item links a P&L account GUID to a budget amount:

For each P&L account in the report:
    Budget Amount = Sum of all BudgetLine.Amount
        where BudgetLine.Account matches this P&L account

If no budget line exists for a particular P&L account, the Budget column shows 0 and the percentage shows 0%.

6.3 How Variance (Remaining) Is Calculated

Remaining (Variance) = Budget Amount − Actual Amount

For Income accounts:
  Positive Remaining = earning MORE than budget (favourable)
  Negative Remaining = earning LESS than budget (unfavourable)

For Expense accounts:
  Positive Remaining = spending LESS than budget (favourable)
  Negative Remaining = spending MORE than budget (unfavourable)

6.4 How Variance Percentage Is Calculated

The percentage column shows what proportion of the budget has been achieved:

For Income accounts (both Actual and Budget are positive):
  Percentage = Round(Actual × 100 ÷ Budget, 0)
  Example: Actual = 250,000, Budget = 500,000 → 50%
  Meaning: "We have achieved 50% of our revenue target"

For Expense accounts (both Actual and Budget are negative):
  Percentage = Round(Actual × 100 ÷ Budget, 0) × (−1)
  Example: Actual = −100,000, Budget = −200,000 → 50%
  Meaning: "We have used 50% of our expense budget"

Edge cases:

• If Budget is 0: percentage shows 0% (division by zero avoided)
• If Actual is 0: percentage shows 0%
• If Actual and Budget have opposite signs (e.g. Actual positive but Budget negative): percentage shows 0%
• Percentage is rounded to the nearest whole number

6.5 The P&L Layout

The report uses the same hierarchical structure as the standard Profit and Loss Statement:

INCOME
  ├── Sales Revenue          250,000    500,000    50%    −250,000
  ├── Service Revenue        100,000     80,000   125%      20,000
  └── [Subtotal: Total Income]

EXPENSES
  ├── Salary Expense         100,000    120,000    83%      20,000
  ├── Rent Expense            30,000     30,000   100%           0
  └── [Subtotal: Total Expenses]

         ───────────────────────────────────────────────────────
  [Net Profit/Loss]

Income groups are displayed with a normal sign. Expense groups are displayed with a "Less:" prefix and their totals are subtracted in the subtotal rows. The Percentage and Remaining columns do NOT show subtotals — they are hidden via the HideTotals flag in the column definition.

7. Drill-Down Capabilities

The Actual column amounts are clickable. Clicking any actual amount opens a detailed transaction viewer showing the individual General Ledger transactions that make up that amount.

The Budget, %, and Remaining columns are NOT clickable — they represent planned amounts or computed variances, not actual transactions.

8. Sample Data and Report Output

8.1 Sample Setup

A trading company prepares a budget for Q1 2026 (January to March) and wants to compare actual results against targets.

Budget Targets

Actual Transactions (Q1 2026)

8.2 Actual vs Budget Report Output

Profit and Loss Statement (Actual vs Budget) — ABC Trading
For the period: 1-Jan-2026 to 31-Mar-2026
                          Actual        Budget          %    Remaining
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
INCOME

  Sales Revenue           950,000      900,000       106%      50,000
  Late Payment Fees         5,500       10,000        55%       4,500

Total Income              955,500      910,000                          ¹

EXPENSES

  Less: COGS              540,000      540,000       100%           0
  Less: Salary Expense    195,000      210,000        93%      15,000
  Less: Rent Expense       45,000       45,000       100%           0
  Less: Depreciation       15,000       15,000       100%           0
  Less: Utility Expense    19,500       18,000       108%      (1,500)
  Less: Marketing Exp      35,000       30,000       117%      (5,000)

Total Expenses            849,500      858,000                          ²

NET PROFIT                106,000       52,000                          ³

Notes:

1. Total Income: 950,000 + 5,500 = 955,500 actual vs 900,000 + 10,000 = 910,000 budget. Income is 45,500 above target.
2. Total Expenses: 540,000 + 195,000 + 45,000 + 15,000 + 19,500 + 35,000 = 849,500 actual vs 540,000 + 210,000 + 45,000 + 15,000 + 18,000 + 30,000 = 858,000 budget. Expenses are 8,500 below budget.
3. Net Profit: 955,500 − 849,500 = 106,000 actual vs 910,000 − 858,000 = 52,000 budget. Profit is 54,000 above target — a 104% favourable variance.

8.3 Verification of Calculation

ACTUAL AMOUNTS (from GL, after sign negation):
  Sales Revenue:         −(−950,000) = +950,000 ✓
  Late Payment Fees:     −(−5,500)   = +5,500 ✓
  COGS:                  −(+540,000) = −540,000 ✓  (negative = expense)
  Salary Expense:        −(+195,000) = −195,000 ✓
  Rent Expense:          −(+45,000)  = −45,000 ✓
  Depreciation:          −(+15,000)  = −15,000 ✓
  Utility Expense:       −(+19,500)  = −19,500 ✓
  Marketing Expense:     −(+35,000)  = −35,000 ✓

BUDGET AMOUNTS (as entered):
  Sales Revenue:         900,000 ✓
  Late Payment Fees:     10,000 ✓
  COGS:                  540,000 ✓
  Salary Expense:        210,000 ✓
  Rent Expense:           45,000 ✓
  Depreciation:           15,000 ✓
  Utility Expense:        18,000 ✓
  Marketing Expense:      30,000 ✓

VARIANCE (Remaining = Budget − Actual):
  Sales Revenue:         900,000 − 950,000 = (50,000)  — above budget ✓
  Late Payment Fees:     10,000 − 5,500 = 4,500       — below budget ✓
  COGS:                  540,000 − 540,000 = 0        — on budget ✓
  Salary Expense:        210,000 − 195,000 = 15,000   — under spent ✓
  Rent Expense:          45,000 − 45,000 = 0          — on budget ✓
  Depreciation:          15,000 − 15,000 = 0          — on budget ✓
  Utility Expense:       18,000 − 19,500 = (1,500)    — over spent ✓
  Marketing Expense:     30,000 − 35,000 = (5,000)    — over spent ✓

PERCENTAGE COMPLETION:
  Sales Revenue:         Round(950,000 × 100 ÷ 900,000, 0) = 106% ✓
  Late Payment Fees:     Round(5,500 × 100 ÷ 10,000, 0) = 55% ✓
  COGS:                  Round(540,000 × 100 ÷ 540,000, 0) = 100% ✓
  Salary Expense:        Round(195,000 × 100 ÷ 210,000, 0) = 93% ✓
  Rent Expense:          Round(45,000 × 100 ÷ 45,000, 0) = 100% ✓
  Depreciation:          Round(15,000 × 100 ÷ 15,000, 0) = 100% ✓
  Utility Expense:       Round(19,500 × 100 ÷ 18,000, 0) = 108% ✓
  Marketing Expense:     Round(35,000 × 100 ÷ 30,000, 0) = 117% ✓

NET PROFIT VERIFICATION:
  Actual:   955,500 (income) − 849,500 (expenses) = 106,000 ✓
  Budget:   910,000 (income) − 858,000 (expenses) = 52,000 ✓
  Variance: 52,000 − 106,000 = (54,000)  — profit 54,000 above target ✓

DR = CR VERIFICATION:
  Total P&L debits:  540,000 + 195,000 + 45,000 + 15,000 + 19,500 + 35,000 = 849,500
  Total P&L credits: 950,000 + 5,500 = 955,500
  Net: 955,500 − 849,500 = 106,000 ✓  (matches Net Profit)

9. Common Issues and Solutions

9.1 Budget Column Shows Zero for All Accounts

Cause: No budget lines were added to the report, or the budget lines were not saved properly.

Solution: Edit the report and add budget lines under the "Lines" section. Select each account and enter its budgeted amount. Save the report again.

9.2 Actual Column Shows Zero for All Accounts

Cause: No transactions exist in the selected date range, or the accounting method filters out all transactions.

Solution: Verify that transactions exist between the From Date and To Date. Check if your accounting method (Accrual vs Cash) is appropriate for your transaction types.

9.3 Percentage Column Shows 0 Where It Should Show a Value

Cause: The budget amount for that account is 0, or the actual and budget amounts have opposite signs (one positive, one negative).

Solution: Check the budget line item for that account — ensure the budget amount is entered correctly. Verify that the actual amount has the correct sign (income should be positive, expenses should be negative due to the P&L convention).

9.4 Actual Amounts Look Incorrect or Reversed

Cause: The sign convention may appear confusing. In the General Ledger, credits are stored as negative values and debits as positive values. The report negates the total so income shows as positive and expenses as negative (with "Less:" prefix in expense groups).

Solution: Drill into the actual amount to see the underlying transactions. Verify that sales invoices show as credit entries and expense payments as debit entries in the GL.

9.5 Report Shows Accounts That Were Not Budgeted

Cause: The report shows ALL P&L accounts that have transactions, even if no budget line exists for them.

Solution: Enable "Exclude Zero Balances" to hide accounts where both Actual and Budget are zero. Alternatively, add budget lines for those accounts with appropriate amounts.

9.6 Data Does Not Match the Standard P&L Statement

Cause: Different date ranges, accounting methods, or division filters between the two reports.

Solution: Ensure the Actual vs Budget report uses the same From Date, To Date, Accounting Method, and Division as the standard P&L Statement you are comparing against.

9.7 Budget Changes Are Not Reflected

Cause: Budget data is stored on the report itself. Editing the budget in one report does not affect other saved reports.

Solution: Each saved Actual vs Budget report has its own independent budget data. To update a budget, edit the specific report and adjust its budget lines.

10. Accounting Regulation Compliance

10.1 Management Approach (IFRS 8)

The Actual vs Budget report aligns with the management approach to segment reporting under IFRS 8. While IFRS 8 does not mandate budget vs actual reporting, variance analysis is a key internal management tool that supports the "management approach" principle — reporting segments in a manner consistent with internal reporting.

10.2 IAS 1 — Presentation of Financial Statements

10.3 IFRS 15 — Revenue from Contracts with Customers

10.4 IAS 8 — Accounting Policies, Estimates and Budgeting

10.5 DR = CR Verification

Sample Data Verification:
  Actual Net Profit: 955,500 − 849,500 = 106,000 ✓
  Budget Net Profit: 910,000 − 858,000 = 52,000 ✓

  Budget Variance: 106,000 − 52,000 = 54,000 above target ✓

  All actual transactions DR = CR:
    Total P&L debits:  849,500
    Total P&L credits: 955,500
    Net profit:        106,000  (implied debit to Retained Earnings) ✓

  Budget is a plan — no DR = CR enforcement needed ✓

  Percentage calculations verified for all accounts ✓
  Remaining (variance) calculations verified for all accounts ✓

End of Profit and Loss Statement (Actual vs Budget) Guide