Question

Financial budgets must be completed before the operating budgets can be prepared.

Answer 1

Answer:

False

Explanation:

Master Budget has two parts:

Operating Budgets

It shows the income generating activity such as the revenues and expenses.

Financial Budgets

Financial busget shows receipts and payments of cash and inflows and outflows of other assets.

Income statement is prepared from Operating Budget and Balance Sheet is prepared from Financial Budget.

Operating Budget is prepared prior to Finance Budget. This is because financial budget requires information obtained through operating budgets.

Hence, the statement given in the question is incorrect.

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