ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: This statement is true. Explanation: A master budget is defined as the comprehensive set of operating and financial budgets that show all the details of the enterprise’s financial plan for a certain period.

Detailed explanation-2: -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-3: -The master budget is also known as the static budget and planning budget. It is called the static budget because it determines both the cost per unit and the expected number of units to be produced and sold.

Detailed explanation-4: -Solution: A Master Budget consists of Sales budget, Production budget and Material budget. The master budget is the aggregation of all lower-level budgets produced by a company’s various functional areas, and also includes budgeted financial statements, a cash forecast, and a financing plan.

Detailed explanation-5: -What is a master budget? 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.