Unit 7: Master Budgeting

Question 1

What is a master budget?

Answer 1

A network of many separate schedules and budgets that together constitute the overall operating and financing plan for the coming operating period.

Question 2

What are the three important factors to be considered in preparing a production budget?

Answer 2

Projected sales volume for the period

Desired amount of ending inventory

Amount of inventory already on hand in the beginning inventory

Question 3

What are the three sections of a cash budget?

Answer 3

1. Cash receipts - From sales, borrowing, and the sale of assets
2. Cash payments or disbursements - For operations, to pay back loans, pay dividends, and buy assets
3. Financing needs - The difference between cash receipts and cash disbursements