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Master budget

A master budget consolidates coordinated functional and financial budgets into the organisation’s overall plan, commonly including budgeted profit or loss, financial position and cash information. It checks whether operating assumptions produce feasible profit, resources and funding. The statements must reconcile through inventory, receivables, payables, capital expenditure and financing movements. A coherent master budget can still be based on uncertain assumptions, so scenario and sensitivity analysis remain useful.

Worked example

The sales, production and cost plans yield budgeted profit of $80,000, but the cash budget shows a temporary $30,000 funding need because inventory and credit sales grow.

Common mistake

Budgeted profit does not automatically fund planned payments. Do not finalise the master budget without checking cash and balance-sheet consistency.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
ACCA PM Supporting September 2026–June 2027
FIA FMA Direct September 2026–June 2027