Question

LO 7.4A company has prepared the operating budget and the cash budget. It is now preparing the budgeted balance sheet. Identify the document that contains each of these balances.
cash
accounts receivable
finished goods inventory
accounts payable
equipment purchases

Answer 1

Answer:

The correct answer is:

A) Cash (Cash Budget)

B) Accounts receivable  (Cash Budget)

C) Finished goods inventory  (Operating Budget)

B) Accounts payable  (Cash Budget)

D) Equipment purchases (Operating Budget)

Explanation:

The operating budget is a planning of the profits and expenses of a company for one or more than one period. It includes the expectations of other budgets on payroll, cost of goods, and inventory.  

The cash budget is a plan for a business or individual's cash inflows and outflows. It is often considered the most important financial budget as it allows companies to better manage their cash positions and prevent unforeseen cash flaws. Current cash, accounts payable and receivables are taken into consideration for the projection of this budget.