The-definition.com

Definition

Master budget

The term “budget” is actually a shorthand term to describe a variety of budget documents. All of these documents are combined into a master budget. The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period.

The master budget contains two classes of budgets. Operating budgets are the individual budgets that result in the preparation of the budgeted income statement. These budgets establish goals for the company’s sales and production personnel. In contrast, financial budgets are the capital expenditure budget, the cash budget, and the budgeted balance sheet. These budgets focus primarily on the cash resources needed to fund expected operations and planned capital expenditures.

Share it:  Cite

More from this Section

  • Cash-basis accounting
    Cash-basis accounting is an alternative to the accrual basis refers to an accounting basis ...
  • Parent company & Subsidiary (affiliated) company
    A company that owns more than 50% of the common stock of another entity is known as the ...
  • Current liabilities
    Current liabilities are obligations that a company expects to pay from existing current ...
  • Check
    A check is a written order signed by the depositor directing the bank to pay a specified ...
  • Production budget
    Production budget is a projection of the units that must be produced to meet anticipated ...