1. The starting point in the budgeting process is the preparation of the:

A. Sales budget

B. Cash budget

C. Budgeted statement of cash flows

D. Budgeted income statement

2. In preparing an operating budget, the sales budget is prepared first. Which of the following is prepared next?

A. Operating expenses

B. Inventory, purchases and cost of goods sold

C. Capital expenditures

D. Budgeted income statement

3. Which of the following describes the cash budget?

A. It depicts the breakdown of sales based on terms of collection.

B. It captures the variable and fixed expenses of the business

C. It helps in planning to ensure the business has adequate cash

D. It aids in planning to ensure the company has adequate inventory on hand

4. Della Company prepared the following purchases budget:

Month Budget purchases

June.............. 67,000

July ...............72,500

August ..........76,300

September ...73,700

October ........69,200

All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. What are the total cash payments made in October for purchases?

A. 77,680

B. 79,480

C. 74,290

D. 69,330

5. California Products Company has the following data as part of its budget for the 2nd quarter.

The cash balance at April 1 is forecast to be 8,200. Assume that there will be no financing transactions or costs during the quarter. Based on the above information only, what will the cash balance be at April 30?

A. 33,900

B. 21,800

C. 26,500

D. 40,800

Transcribed Image Text:

Cash collections Cash Payments: April 30,000 Purchase inventory 4,500 Operating expenses 7,200 Capital expenditures 0 May 32,000 4,600 7,600 24,500 June 36,000 3,800 8,000 5,200 Cash collections Cash Payments: April 30,000 Purchase inventory 4,500 Operating expenses 7,200 Capital expenditures 0 May 32,000 4,600 7,600 24,500 June 36,000 3,800 8,000 5,200

Answer rating: 100% (QA)

1 B Cash budget 2 A Oper... View the full answer