What is Master Budget ? | What are its advantages?

What is a Master Budget?

Master budget acts as summary budget incorporating its component functional budgets and which is finally approved adopted and employed.

Definition of Master Budget

According to Row land and William H. Harr,

“Master budget is a summary of budget schedule in capsule form made for the purpose of presenting the highlights of budget forecast, in one report”.

It is understood from the above two definitions, it comprises the functional budget summaries as in the form of budgeted profit and loss account and budgeted balance sheet. It is the summary budget as approved and accepted by management.

A summary budget becomes master budget. Hence, the summary budget is considered in many angles and approved with some minor and/or major changes according to the changed conditions. Whenever a summary budget is accepted and approved, it becomes master budget. The master budget is prepared by the budget-committee and gives directions for every operation of an organization.

Advantages of Master Budget

The advantages of master budget are presented below:

1. The functional budgets are given in capsule form.

2. All the functional budgets are available in one report.

3. The functional budgets can be checked with cross verification of information given in the master budget.

4. It gives an overall estimated profit of the organization.

5. It gives information relating to forecast balance sheet.

The master budget is highly useful to top management. The reason is that meaningful information is available in capsule form.

Leave a Reply

Recent Posts

Related pages

what are redeemable debenturesbatch costing systemchit fund companies registration processgrounds for winding up a companyinternet retailing definitionadvantages and disadvantages of incremental budgetingdefinition of costing and cost accountingquota sampling advantagesadvertising merits and demeritsebanking pptwhat is chit fund companiesprivity of considerationcost allocation and apportionmentcharacteristics of socialist economic systemmerits of mixed economyfactoringsadvantages of statistical sampling in auditingduties and responsibilities of a purchasing officerwhat does aoa meanwhat is a consumer sovereigntydisadvantages of observational researchfully convertible currencymulti domestic strategywhat does ratify a contract meanexample of prime costadvantages of joint family systemadvantages and disadvantages of operating a franchiseadvantages and disadvantages of e commerceadvantages and disadvantages of franchise ownershipsecuritization definitionadvantages and disadvantages of traditional bankingdischarge of negotiable instrumentsoperating lease v finance leaseintinerant meaningsystematic office supplyqualities of auditorsdisadvantages of venture capitaladvantages of budgetary controlfive characteristics of capitalismultra vires lawdollar equal rupeecoimbatore stock exchangeoptimal cash balance formulaindianstockalphanumeric filingmember voluntary liquidationdifferent types of typewritersremunerations meaning in hindiwhat is cluster sampling examplessundry creditors definition accountingdefine marginal costingmeaning of franchisor and franchiseedematerialisation meaning and conceptrole of imf in international tradeimplied conditions and warrantiescaveat venditor definitionwhat are the characteristics of a mixed economyequity cost of capital calculatordisadvantages of venture capitalcash budget management accountingdifferent types of sales organisationfree market economy advantages and disadvantages pdfexplain scientific management theoryskimming pricescalculate accounts payable turnoverbyproduct meaningwhat are the disadvantages of market economyfeatures of joint hindu family businesscalculating leverage ratiowhat is mbo in managementpayback analysis calculatorveil liftingdebenture financecomparative balance sheet definitionmeaning of ultra vires