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

explain departmentationcumulative preference sharesadvantages of authoritarianfdi definition in indiaobjectives of consumerismadvantages of cooperativesconcentrated niche marketingeconomic batch quantity examplereceivables turnover ratio calculationtamil nadu small scale industriesdifference between edi and ecommercedupont analysis ratiosinterfirm comparisonadvantages and disadvantages of pay back periodfutures and forwards differencerole of sebi in stock markettypes of cheques pptleasing and hire purchase differenceadvantages of backward integrationfactors influencing international marketingautomatic typewriterbills receivable bookquality of successful businessmanreasons for studying entrepreneurshipfinished goods turnovergratuitous baileequalities of enterpreneurdematerialisation of shares meaningrole of cooperative society in indian economywhat are the advantages and disadvantages of e commercewhat are the advantages and disadvantages of e commercemeaning of amalgationtypes of currency swapsmerits of profit maximizationservice blueprinting processadvantages and disadvantages of tax planningnabard financeunderwriting definemarket economy characteristics advantages disadvantagesdisadvantages of convenience samplingelasticity concept in economicsmeaning of amalgamatednationalised bank meaningmultidomestic approachcumulative preference sharesrack jobber exampletangible goods in economicsadvantages and disadvantages of budgetsconcept of elasticity of demandprivity of contract isprivileges of a holder in due coursesebi guidelines for merchant bankingmain functions of wtoconcept of consumer sovereigntyexportilifting veil of incorporationwhat is non convertible debentureswhat is meant by urbanisationdebentures as a source of financewhat is prime cost in cost accountingmonopolies economicsimf loan to indiachronological filing systemrules when writing a precisnational securities depositorye commerce manager responsibilitiesdemotion in hrmskimming pricing advantages and disadvantagesredemption of debenturesbenefits of tqmself help groups advantages and disadvantagescooperative advertising definitionfunctional organizational structure advantages and disadvantagesmerits and demerits of capital budgeting