Question

*71) Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.*

1. Capital expenditures budget
2. Cost of goods sold budget
3. Revenues budget
4. Budgeted statement of cash flows
5. Distribution costs budget
6. Marketing costs budget
7. Cash budget
8. Direct materials cost budget
9. Budgeted balance sheet
10. Budgeted income statement

Answer 1

Budgeting is a vital part of financial planning. The master budget is divided into operating, which deals with daily operations, and financial budgets, which focus on an entity's financial strategy.

Step-by-step explanation:

Budgeting is a crucial aspect of financial planning, and understanding the different elements of a master budget is essential. The master budget consists of both operating and financial budgets that help individuals and organizations manage their finances effectively. Operating budgets are concerned with the day-to-day operations, while financial budgets focus on the financial strategy and health of the entity.

1. Capital expenditures budget - F (Financial budget)
2. Cost of goods sold budget - O (Operating budget)
3. Revenues budget - O (Operating budget)
4. Budgeted statement of cash flows - F (Financial budget)
5. Distribution costs budget - O (Operating budget)
6. Marketing costs budget - O (Operating budget)
7. Cash budget - F (Financial budget)
8. Direct materials cost budget - O (Operating budget)
9. Budgeted balance sheet - F (Financial budget)
10. Budgeted income statement - O (Operating budget)

A good budget serves to track income and expenditures, helping to identify and prioritize financial goals.