Asked by Gisella Perez on Jun 01, 2024
Verified
Which of the following statements is incorrect?
A) A continuous twelve-month budget results from dropping the month just ended and adding a future month.
B) The production budget is derived from the direct materials and direct labor budgets.
C) The cash budget shows anticipated cash flows.
D) In the budget process for not-for-profit organizations the emphasis is on cash flow rather than on revenue and expenses.
Continuous Twelve-Month Budget
A financial planning document that forecasts revenues and expenses on a rolling monthly basis for a year.
Production Budget
An estimate of the total cost of production, including raw materials, labor, and overhead, for a specific period.
Cash Budget
A detailed plan that estimates the cash inflows and outflows over a specific period, used for managing liquidity and ensuring solvency.
- Comprehend the elements and configuration of a cash budget.
- Comprehend the influence of credit conditions and the timing of cash flows on projected cash receipts and disbursements.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
B
Explanation :
The production budget is actually derived from the sales budget, not from the direct materials and direct labor budgets. The sales budget is the starting point that determines how many units need to be produced, which in turn affects the direct materials and direct labor budgets.
Learning Objectives
- Comprehend the elements and configuration of a cash budget.
- Comprehend the influence of credit conditions and the timing of cash flows on projected cash receipts and disbursements.