The budgeted income statement is part of which element of the master budget?

• A. Financial budget
• B. Capital expenditures budget
• C. Cash budget
• D. Operating budget

Answer: (D)

Verified step by step guidance

1. Understand the concept of a master budget: A master budget is a comprehensive financial planning document that includes various individual budgets, such as the operating budget, financial budget, and capital expenditures budget.
2. Learn about the operating budget: The operating budget focuses on the income-generating activities of the business, such as sales, production, and expenses. It includes components like the sales budget, production budget, and budgeted income statement.
3. Recognize the role of the budgeted income statement: The budgeted income statement is a projection of the company's expected revenues, expenses, and net income for a specific period. It is a key component of the operating budget.
4. Differentiate between the financial budget and operating budget: The financial budget deals with cash flows, financing, and capital expenditures, while the operating budget focuses on day-to-day operations and profitability.
5. Conclude that the budgeted income statement is part of the operating budget, as it summarizes the expected financial performance based on operational activities.