 In this presentation, we will take a look at multiple choice questions related to budgeting, going through the questions, and then practicing test taking skills with them. First, a word from our sponsor. Yeah, actually, we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But that's okay, whatever, because our merchandise is better than their stupid stuff anyways. Like our Accounting Rocks product line. If you're not crunching cords using Excel, you're doing it wrong. A must-have product, because the fact as everyone knows of accounting being one of the highest forms of artistic expression means accountants have a requirement, the obligation, a duty to share the tools necessary to properly channel the creative muse. The muse, she rarely speaks more clearly than through the beautiful symmetry of spreadsheets. So get the shirt, because the creative muse, she could use a new pair of shoes. If you would like a commercial-free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. First question, budgeting process usually ends with, A, budgeted financial statements, B, sales budget, C, production budget, D, cash budget, E, an argument. Let's go through this again using the process of elimination. Budgeting process usually ends with, now whenever you see a question like this and you will see them when you're dealing with budgets, because we have to make the budgets in some kind of sequential order. We just try to dive into some component of the master budget without thinking about it in a process-type fashion. It'll be a mess. So we've got to do it in order, and so we're visualizing the order. So we're looking at the end of the order. What's the last thing that's going to happen with this budgeting process? A, the budgeted financial statements. That sounds pretty reasonable, because after you go through this whole thing, you can have a balance sheet and income statement you would think that would be budgeted, but you think the balance sheet and income statement will be. So I'll keep that for now. B says the sales budget. Now the sales budget's got to be one of the first things we do, because we can't do much else until we figure out how many units we're going to sell, because we can't budget too many other things until you know that. So I would think that would be somewhere towards the beginning of the process. C says the production budget, and the production budget, you're going to need that somewhere up there, somewhere towards the upper, middle-end type of area, because you need the production budget to know how much you're going to spend, you need to know how much for your cash flow budget and whatnot. So I don't think that's it. D says the cash budget, and that's towards the end. So maybe we'll keep that for now, because we've got to do all the other stuff before all the times we can do the cash budget. And then E says an argument. Now the arguments hopefully happen during the budgeting process, and by the end of the budgeting process, you have squashed or reconciled or at least moved on from all arguments, you would hope. So we're not going to be E. We're going to be less with A and D. Going through this again. Budgeting process usually ends with A, budgeted financial statements, or D, cash budget. Now of those two, you would think that the financial statements I would think would be after the cash budget. The cash budget would be towards the end, because you would need to know other things to get to the cash budgets, the flow of the cash. But the financial statements are typically what we would consider the end result. When you think of a budget, we're usually thinking about the income statement a lot of times. We're trying to get that income statement into the future, the timing accounts, the performance accounts. But we also will have where we will be at the end of that time period, at the end of that year, and that will be the balance sheet. So I'm going to go with A final answer. Budgeting process usually ends with A, budgeted financial statements. Next question. The starting point for a master budget is estimating A, expenditures, B, cash receipts, C, production, D, sales, E, cash payments. Let's go through this again using the process of elimination. The starting point for a master budget is estimating. Now again, we've got to visualize what the process is going to be. We've got the master budget. We've got to go through all the budgets kind of in order. We can't just jump in the middle and start budgeting things. It's got to go from a beginning point to an ending point. Otherwise, it'll be a mess. So what we want to have that visualization in our head. A, it's going to start with the expenditures. Typically not, because you would think we're going to start somewhere around kind of like you would think of the income statement, which starts with revenue, right? The sales type. We've got to start with the top line, not the middle area. So not expenditures. The cash receipts. Now you might say, cash receipts. That seems like a good place to start because that's at least the money coming in. C says the production. And you might consider that as we need to know how much we produce that somewhere towards the top. So I'll keep it for now. D says sales. And that's the top of the income statement. So you would think that sales like revenue would be somewhere up there. And then E says cash payments, which is kind of like expenditures. I mean, it's kind of like, we would think we would need the receipts first before we consider how to budget the expenditures possibly. So I'm going to eliminate that one. We'll keep B, C and D go through this again. The starting point for a master budget is estimating either B, cash receipts, C production or D sales. Now of those three, I would think it would come down to basically cash receipt or sales before production. And then cash receipts and sales of those two, we're generally going to go through the sales first because we need to basically know what the sales are before we can consider what the cash receipts will be. So usually the sales then we're going to have to at the top towards the top of the starting point of our budgeting process. Final answer, the starting point for a master budget is estimating D sales. Next question. The master budget process ends with A, the production budget, B, the sales budget, C, the selling expense budget, D, the budgeted balance sheet, E, the general and administrative budget. Let's go through this again using the process of elimination. The master budget process ends with A, the production budget. So the production budget you would think would be somewhat, we're imagining the level of, it would be somewhere at the top, you would think, because I got to know how much stuff we're going to produce out of things and that's not what we're going to, that's not the ending point. B, the sales budget. Now that's one of the very first things we need because we got, it's not where we're going to end. That's where we begin. C says the selling expense budget, yeah, it's probably somewhere in the middle. I don't, that doesn't seem like the ending point. It's not like the finale, the selling expense budget doesn't seem the finale last thing that we'd, I don't think it, D says the budgeted balance sheet. That sounds pretty, you know, fully done, completed type thing. I'll keep that one for now. E says the general and administrative budget. Again, not very, that doesn't sound very, you know, the finale type in thing that we want to get to. Sounds kind of, kind of blah. So I'm going with D on this one. I'm going with the final answer. The master budget process ends with D, the budgeted balance sheet.