When a company is preparing a budgeted statement of cash flows and they wish to calculate the payments to suppliers for purchases of inventory, they should refer to which of the following?

Question

Quizplus · Accepted Answer

The budgeted cash payments for purchases is the most relevant information for calculating payments to suppliers for purchases of inventory. This number takes into account the expected purchases of inventory and the expected timing of payments to suppliers. The sales budget and budgeted cash collections are not directly relevant to calculating payments to suppliers for purchases of inventory. The budgeted balance sheet may provide some helpful background information, but it does not contain the specific information needed to calculate payments to suppliers for purchases of inventory.

When a Company Is Preparing a Budgeted Statement of Cash