Final answer:
The master budget is indeed a set of interrelated budgets that gives a comprehensive overview of an organization's plan for a specified time period, usually a fiscal year. Long-range planning in business goes beyond the typical fiscal year and considers issues such as inflation and changes in market conditions over several years.
Step-by-step explanation:
The statement 'The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period' is true. A master budget combines various individual budgets with the aim of creating a comprehensive financial planning tool for an organization. The time period typically referenced is usually a fiscal year, but long-range planning can extend this period much further. Various budgets within the master budget include the sales budget, production budget, and others, which all contribute to formulating the anticipated receipts and expenditures.
Long-range planning often involves periods that can span several years, and is subject to challenges such as accounting for inflation, changes in market conditions, technological advances, and changing consumer preferences. This type of planning is critical for setting long-term financial goals and determining the strategies to achieve them. It's important to note that in the context of business, 'the long run' is a period where all costs are considered variable, and decisions made are aligned with the firm's strategic objectives, such as expanding production capacity or investing in new technologies.