Final answer:
Master budgets aid in coordinating business plans and are not restricted to financial aspects alone. They offer a framework for decision-making, but they are not intended to be administered rigidly and can be adapted as necessary.
Step-by-step explanation:
Understanding Master Budgets
A master budget is a comprehensive financial planning document that includes both financial and non-financial aspects of a business's plan. The correct answer to the question is B) They aid in coordinating what needs to be done to implement a plan. Master budgets help in aligning the company's goals by setting out detailed financial goals and the plans to achieve them. They encompass various individual budgets that together provide a complete picture of the organization's financial activity.
Budgeting as a process involves making choices about how to allocate finite resources, which can be challenging for individuals and organizations alike. The difficulty often arises from balancing desires and needs, and potentially relinquishing some nonessential expenditures. Budgets act as a blueprint for achieving financial goals and require commitment, but they should not be so rigid as to be ineffective under changing circumstances. Flexibility and periodic reviews are essential to adapt to new information or unexpected events.
In summary, while master budgets are comprehensive plans, they are not designed to be rigid post-implementation plans. Instead, they provide a framework for guiding a business's activities and financial decision-making, and they are subject to revision as needed to reflect actual business conditions and changing objectives.