Which of the Following Statements Does Not Correctly Describe Relationships

question 27

Multiple Choice

Which of the following statements does not correctly describe relationships within the master budget? (More than one answer may be correct.)

• A) The production budgets are based in large part upon the sales forecast.
• B) In many elements of the master budget, the amounts budgeted for the upcoming quarter are reviewed and subdivided into monthly budget figures.
• C) The operating budgets affect the budgeted income statement, the cash budget, and the budgeted balance sheet.
• D) The capital expenditures budget affects the direct materials budget.

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Definitions:

Total Inventory

The sum value of all types of inventory a company holds, including raw materials, work-in-progress, and finished goods.

Gross Profit Ratio

A financial metric that shows the portion of sales revenue that exceeds the cost of goods sold, indicating efficiency in production and sales.

Loss on Purchase Commitments

A financial loss that occurs when a company commits to purchasing goods at a certain price but the market value of these goods decreases before the purchase is completed.

Continuing Operations

The segments or activities of a business expected to continue for the foreseeable future, excluding any discontinued operations.