Place the following budgets in the normal sequence of budget preparation for a manufacturing entity.
I. budgeted balance sheet
II. budgeted income statement
III. production budget
IV. sales budget
V. cash budget
VI. cost of sales budget
A) IV, V, VI, II, III, I.
B) IV, III, VI, II, V, I.
C) IV, VI, II, III, V, I.
D) V, II, IV, VI, III, I.

Question

Quizplus · Accepted Answer

The normal sequence of budget preparation for a manufacturing entity typically starts with the sales budget (IV), as sales projections are the basis for planning production, costs, and other financial aspects. Next is the production budget (III), which is based on sales forecasts and inventory policies. The cost of sales budget (VI) follows, detailing the costs associated with the planned production. The budgeted income statement (II) is then prepared, summarizing the expected revenues and expenses. The cash budget (V) is created to project cash flows and ensure liquidity. Finally, the budgeted balance sheet (I) is prepared, reflecting the expected financial position at the end of the period.

Place the Following Budgets in the Normal Sequence of Budget