There Are Various Budgets Within the Master Budget

question 268

Multiple Choice

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

• A) It details the required direct labor hours.
• B) It details the required raw materials purchases.
• C) It is calculated based on the sales budget and the desired ending inventory.
• D) It summarizes the costs of producing units for the budget period.

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Definitions:

Receivables Financing

A form of financing where a company uses its accounts receivable as collateral to secure funding from a financial institution.

Maturity Date

The specific date on which a financial instrument (like a bond or loan) becomes due for payment of principal and interest.

Installment Accounts

Installment accounts are credit accounts where the borrower repays the loan amount plus interest in regular payments over a set period.

Allowance Method

The allowance method is an accounting technique used to account for bad debts by estimating uncollectible accounts and reflecting them as an allowance for doubtful accounts on the balance sheet.