Title

Answer:
The master budget is a comprehensive financial
planning document. It usually includes all of the
lower-level budgets within the operating budget
and the financial budget. The operating budget
shows the income-generating activities of the
firm, including revenues and expenses. The result
is a budgeted income statement. The master
budget will typically have three end products: a
cash budget, a budgeted income statement, and a
budgeted balance sheet.
A master budget consist of a projected income
statement (planned operating budget) and a
projected balance sheet (financial budget)
showing the organization’s objectives and
proposed ways of attaining them.

QUESTION 2
Identify the four basic financial reports and
outline their purpose and content.

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Answer: The four basic financial reports are as
follows:
a. Balance Sheets:
A balance sheet provides detailed information
about a company’s assets, liabilities and
shareholders’ equity.

Assets are things that a company owns that have

value. This typically means they can either be
sold or used by the company to make products or
provide services that can be sold. Assets include
physical property, such as plants, trucks,
equipment and inventory
Liabilities are amounts of money that a company
owes to others. This can include all kinds of
obligations, like money borrowed from a bank to
launch a new product, rent for use of a building,
money owed to suppliers for materials, payroll a
company owes to its employees, environmental
cleanup costs, or taxes owed to the government.

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Shareholders’ equity is sometimes called capital
or net worth. It’s the money that would be left if a
company sold all of its assets and paid off all of
its liabilities. This leftover money belongs to the
shareholders, or the owners, of the company.

b. Income Statements:
An income statement is a report that shows
how much revenue a company earned over a
specific time period (usually for a year or some
portion of a year). An income statement also
shows the costs and expenses associated with
earning that revenue. The literal “bottom line” of
the statement usually shows the company’s net
earnings or losses. This tells you how much the
company earned or lost over the period.

c. Cash Flow Statements:

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 Cash flow statements report a company’s
inflows and outflows of cash. This is important
because a company needs to have enough cash
on hand to pay its expenses and purchase assets.
While an income statement can tell you whether a
company made a profit, a cash flow statement
can tell you whether the company generated
cash.

d. statements of shareholders' equity:

The statement of shareholder equity tells you the
value of a business after investors and
stockholders are paid out. A statement of
shareholder equity is a section of the balance
sheet that reflects the changes in the value of the
business to shareholders from the beginning to
the end of an accounting period.

QUESTION 3
Provide a brief summary of the purpose of each
of the following budgets:
 Cash/Cash flow budget

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 Departmental budget
 Event budget
 Project budget
 Purchasing budget
 Sales budget
 Wage budget.

Bdh
Answer:
Cash/Cash flow budget: A cash flow budget is an
estimate of all cash receipts and all cash
expenditures that are expected to occur during a
certain time period. Estimates can be made
monthly, bimonthly, or quarterly, and can include
nonfarm income and expenditures as well as farm
items.
Departmental Budget: A departmental budget is a
department-level financial plan that lays out
spending for the upcoming quarter or fiscal year.
Managing a budget for your department is similar
to managing a household budget—well, a
household budget with a few more stakeholders
and moving parts thrown in the mix

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Event Budget: The event budget is a projection
(forecast) of the income and expenditure that the
event will incur based on plans made and
information gathered. ... It is fundamentally
important that Event Directors are able to predict
with reasonable accuracy whether the event will
result in a profit, a loss or will break-even.
Project Budget: The Project Budget is a tool used
by project managers to estimate the total cost of
a project. A project budget template includes a
detailed estimate of all costs that are likely to be
incurred before the project is completed.
Purchasing Budget: A purchases budget contains
the amount of inventory that a company must
purchase during each budget period. The amount
stated in the budget is the amount needed to
ensure that there is sufficient inventory on hand
to meet customer orders for products
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