Question

Why is a Master Budget also known as a Summary Budget?

Answer 1

The master budget is a summary of all budgets. Therefore, it is also known as a summary budget. The Institute of Cost Management Accountants, England, has defined it as "the summary budget, incorporating its component functional budgets, which is finally approved, adopted and employed." Thus, the master budget is a summarised form of all the budgets of a firm. This budget requires the approval of the Budget Committee before it is put into operation.