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What is Master Budget?


In order to know about Master Budget we must be aware of what is budget and why it is used in every organization after this we can easily understand the explanation of Master Budget.

Budget=

Budget can be explained in many ways for instance a budget is a financial planning for achieving organizational goals. It is the activity which can also be described as the planning of meeting maximum expenditures with the help of available resources.
The process through which budget is prepared is called budgeting. Every consumer uses available resources to meet expenditures and to fulfill basic and other needs according to his/her budget line.

Master Budget=

For every department of an organization specific budget is prepared like sales budget for sales department, production budget for production department, marketing budget, operating expense budget, capital expense budget and so on.

The Master Budget involves long term plan’s set by management of an organization in order to attain all the goals of organization. It consist of all the budgets (sales, production, marketing and many other budgets) of an organization.

Each budget information is utilize by the management(financial experts) for preparing another budget for example production budget (prepared for units to be required and produced.) may be connected with sales budget (estimated units sales and estimated units price) likewise other budgets are made by management of an organization.


In other words every budget which is prepared in Master Budget are connected with each other which is then further utilized by financial experts for preparing cash-flow statement, income statement and balance sheet etc. of an organization.
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