It is the guideline for the firm's short-term and long-term operations. A strategic plan may extend over several budget periods normally covered by a master budget. (Blocher, 2002).
A master budget is a comprehensive operation plan of a business unit for a future period, which, usually, is for one year or less. The strategic plan of a firm underlies each of the firm's master budgets. A master budget coordinates operations and delineates detailed implementation of the planned activities and includes both financial and non-financial (operating) aspects of the planned activities. (Blocher, 2002).
Because of the widespread use of the electronic spreadsheet programs in accounting practice, most publishers of accounting texts include spreadsheet templates among their ancillary items. Normally, several of the chapter problems can be solved using the template and a commercial spreadsheet program. The student enters the relevant figures from a problem into the appropriate cells of the spreadsheet, and the solution is instantly obtained. (Pence).
Certainly no one would doubt the relevance of spreadsheet applications to the accounting student but these types of exercises, while serving to acquaint the student with the spreadsheet program, can be criticized for two shortcomings. First, they often fail to reinforce the learning of the underlying accounting procedures because the student does not directly apply them. Second, because the student merely utilizes an existing spreadsheet file, little is learned of the way that files are created and can be designed to solve specific business problems. Ideally spreadsheet exercises should provide for the learning of accounting as well as the development of skills in computer usage. (Pence).
Instructors who wish to introduce students to the electronic spreadsheet in a way that enhances the learning of course content will find an excellent opportunity to do so when covering the development of the master budget.
