What Is the Sequence of Steps Used in Preparing the Master

question 71

Multiple Choice

What is the sequence of steps used in preparing the master budget?

• A) Output from financial budgets is used to prepare the operating budgets.
• B) Output from operating budgets is used to prepare the financial budgets.
• C) Operating and financial budgets are prepared independently at the end of the budgeting process.
• D) Operating and financial budgets are prepared independently at the beginning of the budgeting process.

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Definitions:

Credit Period

The Credit Period is the time frame during which a buyer can pay for goods or services purchased on credit without incurring interest charges.

Credit Cost Curve

A graphical representation of the relationship between the cost of credit (interest rates) and the quantity of credit available in the market.

Collection Policy

Collection Policy is a set of procedures that a company uses to manage and collect payments from its customers, ensuring timely collection of receivables.

Aging Schedule

A tabulation of accounts receivable broken down by age, typically in 30-day increments, to assess the collectibility of the receivables.