What does the firm's master budget do?
A) It organizes the operating and financial budgets into a unified whole.
B) It identifies the firm's planned investments in major fixed assets and long-term projects.
C) It shows the appropriate budgeted level of costs for each different level of sales.
D) It uses information from the sales budget and various cost budgets to develop a forecast of net income for the planning period.

Question

Quizplus · Accepted Answer

The firm's master budget integrates all the operating and financial budgets into one cohesive plan. This allows management to see the big picture of the company's financial performance and make informed decisions based on that understanding. The other choices are all important components of the master budget, but none describe its overall purpose as well as choice A.

What Does the Firm's Master Budget Do