Answer (B) is correct . The cash budget is the lynchpin of the financial budget. It combines the results of the operating budget with the cash collection and disbursement schedules to produce a comprehensive picture of where the company’s cash flows are expected to come from and where they are expected to go. All the other budgets listed feed the cash budget in one way or another.
Answer (A) is incorrect because The sales budget precedes the cash budget.
Answer (C) is incorrect because The production budget is the second step in the master budget, immediately following the sales budget.
Answer (D) is incorrect because The cost of goods sold budget is completed well before the cash budget in the budgeting process.
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