Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which type of budget outlines the expected sales and related costs for a specific period?

1. Capital expenditure budget

2. Cash flow budget

3. Operating budget

4. Sales budget

The correct answer is: Operating budget

The type of budget that outlines the expected sales and related costs for a specific period is the sales budget. This budget is an essential part of the overall financial planning for a company, as it provides detailed projections of how much revenue will be generated from sales during the specified time frame. The sales budget is crucial for several reasons. First, it helps businesses set realistic revenue goals, which can drive strategic planning and resource allocation. By estimating sales volumes, companies can plan for production, inventory levels, and staffing accordingly. Additionally, it aids in forecasting cash flow, as sales directly impact the money coming into the business. While an operating budget does include sales information, it encompasses a wider range of operational expenses and revenue categories, thus it serves a broader purpose beyond just sales predictions. A capital expenditure budget focuses on long-term investments and projects in physical assets, while a cash flow budget is designed to track the inflow and outflow of cash, ensuring that the company can meet its financial obligations. The sales budget specifically targets the sales aspect, making it the most appropriate choice for outlining expected sales and related costs for a specific financial period.