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Identify which of given statements are correctly describe relationships within the
Answer to Problem 1STQ
a. The production budgets are based in large part on the sales
b. In many elements of the master budget, the amounts budgeted for the upcoming quarter are reviewed and subdivided into monthly budget figures.
c. The operating budgets affect the
Explanation of Solution
Master budget:
Master budget is an interrelated budget that collectively summarizes all the planned activities of the business. Master budget is not a single document and it consist the number of interrelated budgets like sales budget, production budget, and cash budget. The element of master budget would vary based on the size and nature of the business.
Master budget helps the management to review the upcoming quarter budget with the monthly amount of budget figures.
The sales forecast is the starting point in the preparation of a master budget. When the level of sales has been forecast, the production budget is prepared based on the
Financial budgets are prepared based on the operating budgets, and when there are changes in the operating budget, it would directly affect the financial budgets (budgeted income statement, balance sheet, and
Option “d” is not a correct answer as per above explanation, only option “a, b and c” are the correct answer as per above explanation. Hence, the correct options are a, b, and c.
Therefore, the correct options are,
a. The production budgets are based in large part on the sales forecast.
b. In many elements of the master budget, the amounts budgeted for the upcoming quarter are reviewed and subdivided into monthly budget figures.
c. The operating budgets affect the budgeted income statement, the cash budget, and the budgeted balance sheet.
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Chapter 23 Solutions
Financial & Managerial Accounting
- Can you help me solve this general accounting question using the correct accounting procedures?arrow_forwardQuestion 1181 28 Current Attempt in Progress Here are comparative balance sheets for Migitsu Company. Prepare a statement of cash flows-indirect method. MIGITSU COMPANY Comparative Balance Sheets December 31 Assets 2020 2019 Cash $73,000 $22,000 Accounts receivable 87,000 76.000 Inventory 170,000 191.000 Land 72,000 100.000 Equipment 260,000 200.000 Accumulated depreciation - equipment (66,000) (32.000) Total $596,000 $557,000 Liabilities and Stockholders' Equity Accounts payable $37,000 $47.000 Bonds payable 150,000 210,000 Common stock ($1 par) 216.000 174,000 Retained earnings 193,000 126.000 Total $596,000 $557,000 Additional information: 1 Net income for 2020 was $100,000. N Cash dividends of $33,000 were declared and paid. 3. Bonds payable amounting to $60,000 were redeemed for cash $60,000. -18 4. Common stock was issued for $42,000 cash. 5. Equipment that cost $50,000 and had a book value of $30,000 was sold for $36,000 during 2020; land was sold at cost.arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forward
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