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What is a Master Budget?

The master budget presents the summary of various functional budgets. It is prepared by consolidating different budgets and helps project profit and loss accounts and budgeted balance sheets. The master budget is designed by the budget officer. It needs to be approved by the Budget Committee. The budget can be used for coordinating and controlling different functional departments.

It’s used to track expenses and income for an entire organization, and it combines budgets for individual departments or projects. The master budget remains static throughout the year, which allows the company to do variance analysis, comparing actual incomes and expenses against the company’s forecast.

Advantages of Master Budget

Major parts of the Master Budget

Conclusion

It is a one-year planning document used as a tool for the management to identify its goals well in advance and channel the organization’s resources towards them. The master budget provides a rough guideline for the company’s near-term expectations. It should be noted that the budget should be prepared with the utmost caution as it affects the operational performance of the entire organization.

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