Order of components of master budget
As we said earlier, the components of master budget are interconnected, which means that numbers from one component budget flow to another one. For example sales budget numbers are used in schedule of cash receipts from customers and unless the sales budget is prepared we are unable to prepare schedule of receipts from customers because of lack of information. This means that components of master budget must be prepared in a specific order. We have ordered the above list in such a way that the necessary information needed by any component budget is provided by a preceding component.