Which of the Following Statements Is True

question 11

Multiple Choice

Which of the following statements is true?

• A)The direct materials purchases budget is determined from the direct labor budget.
• B)The sales budget is the only budget based on an estimate of customer demand.
• C)The capital expenditures budget are prepared from the production budget.
• D)The selling and administrative expense budget is input into the forecasted cost of goods sold.

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Definitions:

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers, businesses, and investors.

Required Return

The minimum rate of return on an investment that investors expect to compensate them for the level of risk.

Beta

A measure of a stock's volatility relative to the overall market, indicating its risk compared to the market average.

Risk-free Rate

The return on investment with no risk of financial loss, often represented by the yield on government securities.