Question

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet. The balance of Finished Goods Inventory can be taken from the ________.

A) production budget and cost of goods sold budget
B) financial budget
C) cash budget
D) selling and administrative expenses budget

Answer 1

The balance of the Finished Goods Inventory is derived from the production budget and cost of goods sold budget, which provides information on units produced and costs associated with sold and unsold inventory. Option a.

Step-by-step explanation:

The balance of the Finished Goods Inventory can be taken from the production budget and cost of goods sold budget (a). The production budget determines the number of units that need to be produced to meet sales demand and the ending inventory requirements. The cost of goods sold budget is then used to calculate the cost of the products sold and those that remain in inventory at the end of the period.