A Master Budget ________

question 222

Multiple Choice

A master budget ________.

• A) is the initial plan of what the company intends to accomplish in the period and evolves from both the operating and financing decisions
• B) is only prepared for manufacturers as they are the only type of company with material purchases and work-in-process accounts.
• C) improves companies' market capitalization and evolves from both the investing and financing decisions
• D) is another name given to the financial budget

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Definitions:

Total Dividends

The sum of all dividend payments made by a company to its shareholders over a specific period.

Residual Dividend Policy

A financial policy regarding dividend payments where dividends are only issued after all project and operational expenses have been met and all planned investments are funded.

Optimal Capital Budget

The set of projects that maximizes the value of the firm.

Retained Earnings

The portion of a company’s net profits which is kept within the company instead of being paid out to the shareholders as dividends.