The master budgeting process typically begins with the sales budget and ends with a cash budget and:
A) Budgeted financial statements.
B) Rolling budget.
C) Forecast budget.
D) Capital expenditures budget.
E) Production budget.

Question

Quizplus · Accepted Answer

The sales budget is usually the starting point of the master budgeting process as it is the foundation upon which all other budgets are built. From the sales budget, other budgets such as production, purchases, labor, overhead, and capital expenditures budgets are prepared. The cash budget is usually the final budget in the process and provides a detailed analysis of the company's cash position on a monthly basis. Budgeted financial statements summarize the operational and financial results of the budgeting process and are usually prepared after all other budgets have been completed. The rolling budget is a type of budget where a new budget is added to the end of the budget cycle while the oldest budget is dropped, allowing the company to always have a long-term budget. A forecast budget is a budget that is used to predict future financial results based on past performance and other assumptions. The production budget is a budget that outlines the number of units to be produced or manufactured within a given period based on forecasted sales, projected inventory levels, and capacity limitations.

The Master Budgeting Process Typically Begins with the Sales Budget