Which budget is a comprehensive plan that ties together the operating budgets with the projected financial statements?

Which budget is a comprehensive plan that ties together the operating budgets with the projected financial statements?

• A. Master budget
• B. Rolling budget
• C. ZBB
• D. Imposed budget

Answer: (A)

A master budget provides an integrated plan that brings together the operating details with the financial forecasts. It starts with the sales and uses that to build the operating budgets for production, materials, labor, overhead, and selling/admin expenses. Those operating plans then feed into the financial side—cash budget and pro forma income statement and balance sheet—showing how the planned operations translate into expected cash flows and financial position. This linkage makes the master budget a single, cohesive plan that coordinates resources, guides actions, and provides a basis for comparing actual results to what was planned. Rolling budgets are continually updated, not a fixed, comprehensive plan. Zero-based budgeting focuses on justifying costs from zero each period rather than tying together operating activity and financial statements. An imposed budget is set by management without input, and may fail to reflect realistic operations or cash implications.

A master budget provides an integrated plan that brings together the operating details with the financial forecasts. It starts with the sales and uses that to build the operating budgets for production, materials, labor, overhead, and selling/admin expenses. Those operating plans then feed into the financial side—cash budget and pro forma income statement and balance sheet—showing how the planned operations translate into expected cash flows and financial position. This linkage makes the master budget a single, cohesive plan that coordinates resources, guides actions, and provides a basis for comparing actual results to what was planned.

Rolling budgets are continually updated, not a fixed, comprehensive plan. Zero-based budgeting focuses on justifying costs from zero each period rather than tying together operating activity and financial statements. An imposed budget is set by management without input, and may fail to reflect realistic operations or cash implications.