Concept explainers
Operating Budget:
The operating budget is that budget which is prepared to plan all the operating activities of an organization for a particular period. This budget combines all the sales, production, raw materials, direct labor, manufacturing overhead and selling and administrative expenses budget.
The cash budget is a part of the financial statements which is a plan for the cash receipts and expenses for a particular accounting period. This budget gives an estimation of all the
To explain: Whether the cash budget should be prepared before the operating income budget.
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REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
- Which budget is the starting point in preparing financial budgets? the budgeted income statement the budgeted balance sheet the capital expense budget the cash receipts budgetarrow_forwardWhich of the following is an operating budget? A. cash budget B. production budget C. tax budget D. capital budgetarrow_forwardWhich of the operating budgets is prepared first? A. production budget B. sales budget C. cash received budget D. cash payments budgetarrow_forward
- Which of the following includes only financial budgets? capital asset budget, budgeted income statement, sales budget production budget, capital asset budget, budgeted balance sheet cash budget, budgeted balance sheet, capital asset budget budgeted income statement, direct material purchases budget, cash budgetarrow_forwardWhich of the following is a finance budget? A. cash budget B. production budget C. direct materials purchasing budget D. tax budgetarrow_forwardExplain zero-based budgeting and how it differs from the traditional approach to preparing next years budget.arrow_forward
- Which of the following describes the order in which the four types of budgets must be prepared? a. Production, sales, direct materials purchases, cash received on account b. Sales, production, direct materials purchases, cash budget c. Cash receipts, direct labor, production, sales d. Sales, direct materials purchases, production, cash disbursementsarrow_forwardWhat information is necessary for the operating budgets?arrow_forwardWhich budget evaluates the results of operations at the actual level of activity? capĂtal budget cash budget flexible budget static budgetarrow_forward
- Why might a rolling budget require more management participation than an annual budget?arrow_forwardIf management is being evaluated on their ability to manage a budget, what can they do to increase cash flow?arrow_forwardExplain the role of a sales forecast in budgeting. What is the difference between a sales forecast and a sales budget?arrow_forward
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