 In this presentation, we'll take a look at multiple choice questions related to budgeting, going through the questions, and then practicing test-taking skills with them. First question, reports costs of merchandise to be purchased, A, merchandise purchases budget, B, inventory budget, C, sales budget, D, cash disbursement budget, E, capital expenditures budget. Let's go through this again using the process of elimination. Reports costs of merchandise to be purchased, A, merchandise purchases budget. Sounds awfully reasonable, I'll keep that one for now. B says the inventory budget, that sounds kind of reasonable, like because we're purchasing stuff, merchandise inventory, so I'll keep that. C says sales budget, and that would be a selling stuff, not purchasing stuff, so I don't think that's it. D says cash disbursement budget, and we are kind of dispersing of cash possibly, or accounts payable, it's going up on one or the other, so I'll keep that for now. E says capital expenditures budget, and that has to do with us making expenditures for property, plant, and equipment, not merchandise or inventory, so I don't think it's going to be E. So let's go through this again. Reports costs of merchandise to be purchased, either A, merchandise purchases budget, D inventory budget, D cash disbursement budget. Of those three, I don't think it's D, I would think it'd be A and B, and A looks almost to exactly like the question for it to be actually the one, but it is the one. So we typically call, even though these two sound like kind of the same thing, inventory budget, there is no inventory budget typically, we call it the merchandise purchases budget. So the A is going to be the final answer. Reports costs of merchandise to be purchased, A, merchandise purchases budget. Next question. Which is not usually considered in preparing a sales budget, A, business capacity, B, future economic and market conditions, C, prediction of unit sales, D, the capital expenditures budget, and E, advertising expenses. Let's go through this again using the process of elimination, which is not usually considered in preparing a sales budget. So we're making the sales budget, that's like at the top of the budgeting process. This is one of the first things that we're going to start you thinking of the order of operations, we're making the sales budget, so that we can then make the other type of budgets typically first. So this is the first thing we want to get done, obviously we want sales to be as high as possible. A is the business capacity. So that sounds, you know, capacity of the business to make the sales budget, how much can we sell, that sounds reasonable, B says, future economic and market conditions, that's going to be something we will consider. We're going to think of last year's numbers and then consider future.