19RQ - Horngren'S Financial And Managerial Accounting

Question

What budgets are included in the financial budget for a merchandising company?

Step-by-Step Solution

Answer

The financial budget for a merchandising company includes a capital expenditure budget and a cash budget.

Step 1: Merchandising company

Merchandising company is a one that obtains goods from outside and then provides them to the customers. Merchandising companies do not manufacture goods.

Step 2: Financial budget for a merchandising company

The financial budget for a merchandising company includes a capital expenditure budget and a cash budget. Just like the cash budget of a manufacturing company it also includes three parts cash receipts, cash payments, and short-term financing.