Answer: correct option is(c)
Explanation: The correct option is (C) operating budget and the financial budget.
First of all a budget is a very handy management decision making tool, which is used by every firm. All firms make budget to see what is the expected forecast of expenses and income for a defined period of time.
A master budget includes cluster of lower level budget produced by a firms various functional areas, and with this also includes budgeted financial statements, also giving cash forecast and helps the management of a company to give direction to the activities of corporation and in checking the performance of various functional responsibility centers.
A master budget includes two main components :-
a) Operating budget - It is a budget which includes all the expenses and income that a firm is expecting over a defined period of time. The main components of this budget includes income, expenses and profit, so basically this budget will tell how much profit a firm will earn over a defined period of time, given the condition that information given regarding income and expenses are correct.
b) Financing budget - this budget tells about how a firm would receive receipts and how it would make payments in a defined period of time. So basically it means the the amount of cash inflow a firm would receive and the cash outflows that would happen because of the payment made by the firm. Main focus here is on the cash budget and budgeted balance sheets.