Answer (C) is correct . The pro forma balance sheet is the balance sheet for the beginning of the period updated for projected changes in cash, receivables, inventories, payables, etc. Accordingly, it cannot be prepared until after the cash budget is completed because cash is a current asset reported on the balance sheet.
Answer (A) is incorrect because The capital expenditure budget is an input necessary for the preparation of a cash budget.
Answer (B) is incorrect because The sales budget is usually the first budget prepared.
Answer (D) is incorrect because A production budget is normally prepared before the cash budget is started.
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