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Master Budget

Master Budget – Components of Master Budget | Managerial Accounting

Posted on March 28, 2021 by Smirti Bam

Master Budget | Components of Master Budget | Managerial Accounting

Table of Contents

  • Master Budget | Components of Master Budget | Managerial Accounting
    • What is master budget
    • Components of Master Budget
    • Things to Consider before preparing Master Budget
    • Play Quiz : Test Your Knowledge
      • the first budget customarily prepared as part of an entity’s master budget is the
      • the usual starting point for preparing a master budget is forecasting or estimating:
      • the starting point in developing the master budget is the preparation of the ________.
      • which is the last step in developing the master budget?
      • principal components of a master budget include
      • the master budget of a merchandising company includes a:
      • select the correct statement about the master budget.
      • the master budget normally covers:
      • the difference between the actual revenues and expenses and the master budget is known as a
      • which of the following items will be same for a flexible budget and a master budget?
      • which of the following budgets is the cornerstone of the master budget?

What is master budget

Master Budget is the combination of different set of separate independent functional budgets reflecting a complete set of financial plan for a business firm. When all of the functional budgets are prepared then at the end maser budget is prepared. The type of functional budget that are prepared depends upon the nature of the business entity.

The master budget is a complete set of books of accounts for future because it accumulates all the financial information in one place. Master budget records and reports the business transaction of the forthcoming periods whereas the financial accounting records and reports the business transaction of already incurred transaction.

Components of Master Budget

  • Sales Budget
  • Production Budget
  • Purchase Budget
  • Expenses Budget
  • Equipment Purchase Budget
  • Cash Budget

Things to Consider before preparing Master Budget

There are some of the information that must be known clearly before formulating the complete set of master budget which include,

  • Goal of the Firm
  • Policies and Guidelines
  • Inventory Policy
  • Policies for cash deficit and excess fund
  • Standard and allowances
  • Product Costing and inventory valuation system

Play Quiz : Test Your Knowledge

0%

the first budget customarily prepared as part of an entity's master budget is the

sales budget
Show hint
Correct! Wrong!

the usual starting point for preparing a master budget is forecasting or estimating:

Sales
Show hint
Correct! Wrong!

the starting point in developing the master budget is the preparation of the ________.

sales budget
Show hint
Correct! Wrong!

which is the last step in developing the master budget?

preparing the budgeted balance sheet.
Show hint
Correct! Wrong!

principal components of a master budget include

All of the above
Show hint
Correct! Wrong!

the master budget of a merchandising company includes a:

Purchases budget.
Show hint
Correct! Wrong!

select the correct statement about the master budget.

The master budget usually includes operating budgets and capital budgets, and pro forma financial statements.
Show hint
Correct! Wrong!

the master budget normally covers:

1 year.
Show hint
Correct! Wrong!

the difference between the actual revenues and expenses and the master budget is known as a

master budget variance
Show hint
Correct! Wrong!

which of the following items will be same for a flexible budget and a master budget?

total fixed costs
Show hint
Correct! Wrong!

which of the following budgets is the cornerstone of the master budget?

The sales budget.
Show hint
Correct! Wrong!

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