Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following budgets is directly based on information from the sales budget?

Cash budget

Production budget

Capital expenditures budget

Direct materials budget

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Verified step by step guidance

Understand the purpose of the sales budget: The sales budget estimates the expected sales in units and dollars for a specific period. It serves as the foundation for other budgets in the budgeting process.

Recognize the relationship between the sales budget and the production budget: The production budget is directly influenced by the sales budget because it determines the number of units that need to be produced to meet sales demand while considering inventory levels.

Identify the formula for the production budget: The production budget is calculated using the formula:

Required Production Units = Budgeted Sales Units + Desired Ending Inventory Units - Beginning Inventory Units

Explain why other budgets are not directly based on the sales budget: The cash budget, capital expenditures budget, and direct materials budget are influenced by other factors, such as production needs, financing decisions, and material requirements, rather than being directly derived from the sales budget.

Conclude that the production budget is the correct answer: Since the production budget relies directly on the sales budget to determine the number of units to produce, it is the budget most closely tied to the sales budget.