Question

Which of the following lists the components of the master budget in correct chronological order?

A. Cash budget, budgeted income statement, budgeted balance sheet.
B. Budgeted balance sheet, cash budget, budgeted income statement.
C. Budgeted income statement, cash budget, budgeted balance sheet.
D. It doesn't matter in which order they are prepared.

Answer 1

The correct chronological order of the components of a master budget is budgeted income statement, cash budget, budgeted balance sheet.

Step-by-step explanation:

The correct order of the components of a master budget is:

1. Budgeted income statement
2. Cash budget
3. Budgeted balance sheet

The budgeted income statement is prepared first as it estimates the expected revenues and expenses for a specific period. The cash budget is then prepared to determine the expected cash inflows and outflows during that period. Lastly, the budgeted balance sheet is created to show the projected financial position at the end of the period.