7. In the sales budget, expected collected: a. All sales on account in the curre

Question

7.    In the sales budget, expected collected:

a.    All sales on account in the current month.

b.    All sales on account in the following month.

c.    A half of sales on account in the following month.

d.    None of sales on account.

8.    For the Inventory Purchases Budget the desired ending inventory is:

    a.        The cost of goods sold plus required purchases.

    b.        Total inventory needed.

    c.        Fixed cost divided by contribution margin in dollars

    d.        The beginning inventory of the next month budgeted.

Explanation / Answer

7.    In the sales budget, expected collected:

Answer: The right answer is option (a) All sales on account in the current month.

In sales budget we will show both cash sales and sales on account. We generally prepare sales budget on monthly basis, weekly basis and yearly basis. While preparing the monthly sales budget we include cash sales and sales on account for the month only. Therefore, the right answer is option (a).

8.    For the Inventory Purchases Budget the desired ending inventory is:

Answer: The right answer is option (d) The beginning inventory of the next month budgeted.

In Inventory purchases budget we will show Beginning inventory, purchases and Ending inventory. Ending inventory is nothing but next months budgeted requirement. Therefore, the right answer is option (d).

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