Bottom Line on Budgeting --Dickeson

Next would come "Cost of Goods Sold" that the accountant would fill in using percentages of last year, with only a faint notion of what would be required for jobs in the following year. That was followed by a gross profit number that was pure fiction.

And then came a loss reserve for doubtful accounts, plus another reserve for inventory shrinkage. Always, always, we'd estimate these at more than we really anticipated. Management hates bad-news surprises, but is pleased when things turn out better than expected.