ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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combined form the master budget
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are prepared before the master budget
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are prepared after the master budget
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have nothing to do with the master budget
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Detailed explanation-1: -Expert Answer. A) Yes, this option is correct. Operating budget (OB) and financial budgets (FB) is the part of the MB or MB that includes all the lower budgets of an entity including also OB and FB. MB refers to budgets budget and it combines all the other budgets.
Detailed explanation-2: -The master budget has two major categories: the financial budget and the operating budget. The financial budget plans the use of assets and liabilities and results in a projected balance sheet. The operating budget helps plan future revenue and expenses and results in a projected income statement.
Detailed explanation-3: -A master budget is a company’s central financial planning document. It typically covers a full fiscal year and includes “lower-level” budgets-like a sales budget and a labor budget-cash flow forecasts, financial statements, and a financial plan.
Detailed explanation-4: -The Master Budget contains two main parts called the Operating Budget and the Financial Budgets respectively. An operating budget is a detailed statement showing all the operational expenses and revenues (income) expected during a particular period of time.
Detailed explanation-5: -C) Operating budgets are prepared independently of the master budget. A budget is the quantitative expression of a proposed plan of action by management for a specified period. A budget generally includes only the financial aspects of management’s plan.