Final answer:
The correct statement about budgets is A) Master budgets express management's operating and financial plans. The master budget integrates all aspects of an organization's financial plans and includes elements that lead to the formation of the financial budget.
Step-by-step explanation:
The student's question pertains to budgets, specifically within the context of business budgeting and management. Among the options presented, the true statement is: A) Master budgets express management's operating and financial plans. A master budget is comprehensive, encapsulating all of an organization's financial plans and is usually prepared annually. This includes various components such as sales budgets, production budgets, and others, all leading to the creation of financial budgets, such as the cash budget and the budgeted financial statements.
It's important to note that financial budgets are not prepared independently; they actually form one part of the master budget and are prepared after the operating budgets, something that option B and C incorrectly suggests. Additionally, financial budgets, while important, are not the core standalone documents; it is the master budget that serves as the core framework within which financial budgets reside, which negates option D.
Budgeting plays a vital role at all levels of government, including federal, state, and local levels, to plan the expected revenue in taxes and other incomes and allocate expenditures accordingly. However, policy decisions and unforeseen events can lead to significant shifts in budgets over time.