MASER BUDGET

[steelman]

WHICH OF THE FOLLWING STATEMENTS ABOUT THE MASTER BUDGET IS CORRECT?

A) IT IS THE REPONSIBILITY OF THE OPERATIONAL MANAGERS TO AGREE THE MASTER BUDGET.
B) THE MASTER BUDGET CANNOT BE AMENDED ONCE PREPARED.
C) PREPARATION OF THE MASTER BUDGET IS USUALLY THE LAST STAGE AFTER THE OPERATING BUDGETS ARE AGREED
D) THE MASTER BUDGET IS ALWAYS PREPARED FIRST BEFORE THE OPERATING BUDGETS.

ANS= B

RIGHT OR WRONG

[hariharm]

Hi Steelman,

The correct answer is in fact (c): PREPARATION OF THE MASTER BUDGET IS USUALLY THE LAST STAGE AFTER THE OPERATING BUDGETS ARE AGREED.

B) is wrong because although it is not common (nor is it advisable) for the Master Budget to change frequently, it is possible that circumstances may force some of the operational budgets to change (in which case the Master Budget also has to change). In practice, there has to be a very compelling reason for such a change to be entertained.