The master budget

Question

The master budget

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The master budget serves as a managerial tool for an organization to plan and coordinate its activities for the upcoming period, integrating all the individual budgets, and providing a comprehensive view of the organization's financial and operational objectives. It is a critical component of an organization's planning and control processes, enabling managers to monitor performance against planned targets, adapt to changing circumstances, and make informed decisions. It may utilize information from financial accounting, but its scope extends beyond it, including operational and strategic considerations. It also incorporates pro forma financial statements, but it is not limited to them. The determination of an organization's cost of capital may inform its budgeting decisions, but it is not the exclusive purpose or outcome of the master budget.

The Master Budget