Final answer:
The true statement about a traditional master budget is that it recognizes interdependencies among various organizational departments and their budgets, integrating them into a cohesive plan.
Step-by-step explanation:
Of the options provided, the statement that is true of a traditional master budget is that it recognizes interdependencies. Option a states that a traditional master budget is department oriented. However, the master budget is indeed comprehensive and includes all the various budgets of a company's departments, it also recognizes how those departments interact and the dependencies between them. Option b, which states that it uses the zero-base budgeting approach is incorrect, as this is a different type of budgeting methodology where all expenses must be justified for each new period, starting from a 'zero base.' A traditional master budget typically uses the previous year's budget as a base and adjusts for planned changes. Option c, which suggests that the traditional master budget is dynamic in nature, is also incorrect. Traditional master budgets are generally static and set for the upcoming fiscal year without regard for changes that might occur during the year. Lastly, option d is correct as the traditional master budget indeed recognizes interdependencies; it includes a set of budget schedules that reflects the relationship between various components, such as sales, cost of goods sold, operating expenses, and other financial activities.