List the Operating Budgets

question 107

Essay

List the operating budgets. Describe the purpose of each of the budgets listed and the order in which they are prepared. Describe how the budgets are interrelated.

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Definitions:

Accounting Profits

The net income of a company determined by subtracting total expenses from total revenues, according to generally accepted accounting principles.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, representing profit beyond the normal rate of return.

Opportunity Cost

The loss of potential gain from other alternatives when one particular alternative is chosen.

Savings Account

A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.