Question

Match the definitions 1 through 9 with the term or phrase a through i

a. Budget

b. Cash budget

c. Merchandise purchases budget

d. Safety stock

e. Budgeted income statement

f. General and administrative expense budget

g. Sales budget

h. Master budget

i. Budgeted balance sheet

1. A comprehensive business plan that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet.

2. A quantity of inventory or materials over the minimum to reduce the risk of running short.

3. A plan showing the units of goods to be sold and the sales to be derived; the usual starting point in the budgeting process.

4. An accounting report that presents predicted amounts of the company’s revenues and expenses for the budgeting period.

5. An accounting report that presents predicted amounts of the company’s assets, liabilities, and equity balances at the end of the budget period.

6. A plan that shows the units or costs of merchandise to be purchased by a merchandising company during the budget period.

7. A formal statement of a company’s future plans, usually expressed in monetary terms.

8. A plan that shows predicted operating expenses not included in the selling expenses budget.

9. A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from any loans needed to maintain a minimum cash balance and repayments of such loans.

Short answer

Each amount under the different budget schedules is entered on an estimated basis to have an idea of the organization's financial stability.

Step-by-step solution

Introduction

Each budgeting item carries a distinct feature that makes them different when an organization needs to estimate its future growth and potential in the market.

Match the following answers

S no.	Terms	Definition
a	Budget	(7) A formal statement of a company’s future plans, usually expressed in monetary terms.
b	Cash budget	(9) A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from any loans needed to maintain a minimum cash balance and repayments of such loans.
c	Merchandise purchases budget	(6) A plan that shows the units or costs of merchandise to be purchased by a merchandising company during the budget period.
d	Safety stock	(2) A quantity of inventory or materials over the minimum to reduce the risk of running short
e	Budgeted income statement	(4) An accounting report that presents predicted amounts of the company’s revenues and expenses for the budgeting period.
f	General and administrative expense budget	(8) A plan that shows predicted operating expenses not included in the selling expenses budget.
g	Sales budget	(3) A plan showing the units of goods to be sold and the sales to be derived; the usual starting point in the budgeting process.
h	Master budget	(1)A comprehensive business plan that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet.
i	Budgeted balance sheet	(5) An accounting report that presents predicted amounts of the company’s assets, liabilities, and equity balances at the end of the budget period.