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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Select the one budget below that is not an operating budget.

  1. a. Cost of goods sold budget
  2. b. Cash budget
  3. c. Production budget
  4. d. Overhead budget
  5. e. All of these.

To determine

Identify the budget which is not a part of an operating budget.

Explanation

Operating Budget:

Operating budgets include budgets relating to operating activities or revenue generating activities of an organization. Operating activities like sales, production, cost of goods sold and labor expenses are included in operating budgets.

b.

Cash budget is a financial budget. It is prepared to assess inflows and outflows of cash to manage cash balance and timing related issues. Closing cash balance is computed by adding cash receipts and subtracting cash payments from the expected cash available in the beginning.  It is not considered as an operating budget. Therefore, this is the correct option.

a.

The cost of goods sold budget relates to revenue and is one of the operating budgets...

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