In preparing an operating budget,the sales budget is prepared first.Which of the following is prepared next?
A) Capital expenditures
B) Budgeted income statement
C) Inventory, purchases and cost of sales
D) Electricity and gas

Question

Quizplus · Accepted Answer

After the sales budget is prepared, the next step is to prepare the inventory, purchases and cost of sales budget. This budget is essential to determine the amount of inventory to be purchased and the cost that would be incurred in buying the inventory. Capital expenditures are usually prepared much later as they involve a large amount of money and require planning and approval. The budgeted income statement is also prepared later as it takes into account all the anticipated revenue and expenses of the business. Electricity and gas expenses are usually included in the operating expenses budget, which comes later in the budgeting process.

In Preparing an Operating Budget,the Sales Budget Is Prepared First