What is the sequence of steps(order of preparation)for the operating budget?
A) sales budget, operating expense budget, purchases and cost of goods sold budget
B) sales budget, capital budget, operating expense budget
C) sales budget, purchases and cost of goods sold budget, schedule of cash collections from customers, operating expense budget
D) sales budget, schedule of cash collections from customers, purchases and cost of goods sold budget, schedule of cash disbursements for purchases, operating expense budget

Question

Quizplus · Accepted Answer

The sequence starts with the sales budget, which forecasts the sales for the period. Next, the schedule of cash collections from customers is prepared, based on the sales budget and the company's credit terms. This is followed by the purchases and cost of goods sold budget, which is dependent on the sales budget. The schedule of cash disbursements for purchases is then prepared, detailing when payments for purchases will be made. Finally, the operating expense budget is prepared, which includes all other operating expenses expected during the period. This sequence ensures that all aspects of the operating budget are properly aligned and based on the initial sales forecast.

What Is the Sequence of Steps(order of Preparation)for the Operating