A manufacturing ﬁrm would begin preparation of its master budget by constructing a:

Question

Quizplus · Accepted Answer

The first step in preparing a master budget is to create a sales budget, as it provides the basis for all other budgets. The sales budget should be created before any other budgets that depend on it, such as the production budget, which would be the next step in the process. The cash budget and capital budget are also important parts of the master budget, but they would be developed after the sales and production budgets. Pro-forma financial statements would be developed as a part of the overall master budget, but they would not be the first step in the process.

A Manufacturing ﬁRm Would Begin Preparation of Its Master Budget