alleryStart learning →The cash budget and the capital expenditures budget are included on which statement?
AThe budgeted balance sheet
BThe budgeted income statement
CThe statement of cost of goods sold
DThe direct materials cost budget
Answer & Solution
Correct answer: A. The budgeted balance sheet
1. A master budget splits into operating budgets and financial budgets.
2. Operating budgets cover sales and the costs of production and end in the budgeted income statement.
3. Financial budgets look at matters that are not directly operational but affect the ability to pay obligations.
4. The cash budget and the capital expenditures budget are financial budgets, so they appear on the budgeted balance sheet.
5. Cash and fixed assets are balance sheet items, which is why they land there rather than in income.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.4 Master Budget_
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