All 34 The Master Budget questions
More in The Master Budget
How does the cash budget fit within the master budget? What is the cost of goods sold budget and how does it link inventory budgets? Why must the budgeted balance sheet balance, and what if it doesn't? What is the relationship between the master budget and responsibility accounting? What is the difference between the operating cycle and the master budget? How is depreciation handled across the master budget statements? What is the link between budgeted contribution and the master budget? What is the budgeted cost of goods manufactured? What is the order of dependency among the master budget schedules? How does the master budget serve as a coordination tool?
Advertisement
Back to results for “Cash Budgeting”
Budgeting & Forecasting › The Master Budget

How does the sales budget flow through to the budgeted balance sheet?

Intermediate

Answer

Sales drive revenue (income statement) and, via collection timing, closing receivables (balance sheet) and cash receipts (cash budget). Sales also determine production, hence inventory and payables. So a single sales figure ultimately shapes revenue, receivables, inventory, payables, cash, and retained earnings across all three statements.
Real-world example Higher budgeted sales raise receivables and inventory as well as profit on the pro forma statements.

Common follow-ups: Which balance-sheet items does sales affect? | Why is the master budget interlinked?

Types of Budgets Cash Budgeting The Master Budget
All 34 The Master Budget questions