1)State the different types of budgets that may be prepared to construct the master budget

1.The different types of budgets that may be Prepare to construct the master budget are as follows:

1. OPERATING BUDGET:It is a budget which Consists of Sales, COGS,Administrative Expenses and Selling Expenses which gives result as an operating income.

2. CAPITAL EXPENDITURE BUDGET:It is a budget which gives the information about the co's plan for purchasing fixed or long term assets like Property, plant and equipment.

3. FINANCIAL BUDGET:It consists of Cash Budget,Budgeted Income Statement and Budgeted Balance Sheet.

2. DIFFERENCE:

1. Strategic Planning focus on long term planning/growth which is at least one year whereas Operational Budgeting focus on short term planning which is less than one year.

2.Strategic Planning deals in money spent on general expenditure whereas Operational Budgeting deals in money spent for specific expenditure.

3.Strategic Planning comes from Strategic Budget whereas Operational Budgeting comes from annual budget of department.

4.Strategic Planning reporting is done on quarterly or annual basis whereas Operational Budgeting is done on monthly basis.

3. The benefit to an entity in preparing a budget for the coming financial year are as follows:

1.Preparation of Budget gives a road map on financial basis.

2.Preparation of Budget can be considered as an effective management tool for the organization.

3.Preparation of Budget can also Provide Internal control Mechanism.

4.Preparation of Budget can Increase Revenue as budget help in Forecasting Sales.