The Master Budget

Topics: Income statement, Balance sheet, Financial statements Pages: 3 (555 words) Published: March 9, 2010
Accessed Discussion Question: Master Budget 1

Accessed Discussion Question: Master Budget

Michael Jordan

University of Phoenix

Accounting 561

Dr. Trillion Cason

October 13, 2009

The master budget is a detailed and comprehensive analysis of an organization’s long and short term goals. 1. Identify the major inputs to the master budgets and the usefulness of each.

Operational budget and financial budget are the two major parts of the master budget.

The financial budget focuses on the income statement and its supporting schedules or, in an organization with no sales revenues, on budgeted expenses and supporting schedules.

The financial budget focuses on the effects that the operating budget and other plans such as capital budgets and repayments of debt will have on cash balances.

2. Additionally, why would a company need to create a master budget?

A budget is a major resource to a company because it gives a detailed overview of the finances of the company. The budget answers all the question regarding the revenues and expenses of the company. Its also was to help management to avoid finical problems and make quality decision regarding the finances.

3. What are the advantages and the disadvantages?

Advantages of budgets are:

• Forces management to think ahead of see what they need to reach their goals.

• Budgeting aids managers in communicating objectives and coordinating actions across the organization.

• It is a good tool to evaluate performance of the companies finances and employees.

Disadvantages of budgets are:

• Employees fail to accept responsibility in making a reasonable budget for there department in the company.

• There are strong temptations to lie and cheat in the budget process to get possible bonuses.

• I is very difficult of calculate accurate sales forecasts. •
• 1. In what ways do the elements of the four financial...
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