ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Operating RevenueNet SalesCost of Merchandise SoldGross Profit on OperationsOperating ExpensesSelling ExpensesTotal Selling ExpensesAdministrative ExpensesTotal Administrative ExpensesTotal Operating ExpensesIncome from OperationsNet Income before Federal Income TaxFederal Income Tax ExpenseNet Income after Federal Income Tax
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Net SalesCost of Merchandise SoldGross Profit on OperationsOperating ExpensesAdministrative ExpensesNet Income before Federal Income TaxFederal Income Tax ExpenseSelling ExpensesTotal Administrative ExpensesTotal Operating ExpensesIncome from OperationsTotal Selling ExpensesNet Income after Federal Income TaxOperating Revenue
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Net SalesCost of Merchandise SoldGross Profit on OperationsOperating ExpensesAdministrative ExpensesTotal Administrative ExpensesTotal Operating ExpensesIncome from OperationsNet Income before Federal Income TaxFederal Income Tax ExpenseSelling ExpensesTotal Selling ExpensesNet Income after Federal Income TaxOperating Revenue
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Net SalesGross Profit on OperationsOperating ExpensesAdministrative ExpensesNet Income before Federal Income TaxFederal Income Tax ExpenseSelling ExpensesTotal Operating ExpensesCost of Merchandise SoldIncome from OperationsTotal Selling ExpensesNet Income after Federal Income TaxOperating RevenueTotal Administrative Expenses
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Detailed explanation-1: -Thus, the normal sequence of budget preparation is the preparation of the sales budget, then the budgeted income statement, and then the balance sheet.
Detailed explanation-2: -The income statement is read from top to bottom, starting with revenues, sometimes called the “top line.” Expenses and costs are subtracted, followed by taxes. The end result is the company’s net income-or profit-before paying any dividends. This is where the term “bottom line” comes from.
Detailed explanation-3: -They are: Net Sales, Cost of Goods Sold, Gross Profit, Total Operating Expenses, net gain/loss from other activities, Income before taxes, Income tax expense, and Net Income.
Detailed explanation-4: -The order of completing the operating budget is as follows: Sales budget. Production budget. Direct material budget.