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How is the budgeted income statement prepared? How does the cash budget fit within the master budget? What is the cost of goods sold budget and how does it link inventory budgets? Why must the budgeted balance sheet balance, and what if it doesn't? How does the sales budget flow through to the budgeted balance sheet? What is the difference between the operating cycle and the master budget? How is depreciation handled across the master budget statements? What is the link between budgeted contribution and the master budget? What is the budgeted cost of goods manufactured? What is the order of dependency among the master budget schedules?
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Budgeting & Forecasting › The Master Budget

What is the relationship between the master budget and responsibility accounting?

Intermediate

Answer

The master budget is broken down by responsibility centers (cost, revenue, profit, investment centers), assigning each manager the portion they control. Actual results are then reported against each center's budget, so performance is measured where responsibility lies. This links the overall plan to individual accountability.
Real-world example Each department's slice of the master budget becomes its manager's accountable target.

Common follow-ups: What is a responsibility center? | How does this aid accountability?

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All 34 The Master Budget questions