Discussion
A master budget comprises of :
Answer: D
The keyed answer is The budgeted cash flow, budgeted profit and loss statement and budgeted balance sheet.
CIMA defines the master budget as the budget prepared to bring together all the functional budgets, and its summary output is the set of budgeted financial statements: the budgeted profit and loss account, the cash budget and the budgeted balance sheet. These show the overall effect of all the departmental plans on the firm's profit, liquidity and financial position.
The budgeted cash flow or the budgeted profit and loss account alone is only one part of it. 'The entire set of budgets prepared' describes the full budget set rather than the master budget's summary statements, which is why the key prefers the option naming all three statements.
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