The Master Budget - primarily on the cash resources needed...

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The Master Budget The term “budget” is actually a shorthand term to describe a variety of budget documents . All of these documents are combined into a master budget. The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period . The master budget contains two classes of budgets. Operating budgets are the individual budgets that result in the preparation of the budgeted income statement. These budgets establish goals for the company's sales and production personnel. In contrast, financial budgets are the capital expenditure budget, the cash budget, and the budgeted balance sheet. These budgets focus
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Unformatted text preview: primarily on the cash resources needed to fund expected operations and planned capital expenditures. Illustration 20-2 pictures the individual budgets included in a master budget, and the sequence in which they are prepared. The company first develops the operating budgets, beginning with the sales budget. Then it prepares the financial budgets. We will explain and illustrate each budget shown in Illustration 20-2 except the capital expenditure budget. That budget is discussed under the topic of capital budgeting in Chapter 23 . Illustration 20-2 Components of the master budget...
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The Master Budget - primarily on the cash resources needed...

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