A slightly inaccurate sales forecast, since it comes at the beginning of the budgeting process
A) has an insignificant influence on the other schedules comprising the annual financial budget.
B) should not influence the accuracy of the other schedules comprising the annual financial budget at all.
C) has a distorting effect on the other estimates in the budget.
D) slightly influences the sales figure and the budgeted financial statements and influences no other figures.

Question

Quizplus · Accepted Answer

A slightly inaccurate sales forecast at the beginning of the budgeting process can have a distorting effect on the other estimates in the budget. This is because the other schedules in the financial budget are often based on the sales forecast, such as the production schedule and the cash flow statement. If the sales forecast is inaccurate, it can lead to errors in these other estimates and ultimately impact the accuracy of the entire budget.

A Slightly Inaccurate Sales Forecast, Since It Comes at the Beginning