All 34 The Master Budget questions
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Why must the budgeted balance sheet balance, and what if it doesn't? What is the relationship between the master budget and responsibility accounting? How does the sales budget flow through to the budgeted balance sheet? What is the difference between the operating cycle and the master budget? What is the link between budgeted contribution and the master budget? What is the budgeted cost of goods manufactured? What is the order of dependency among the master budget schedules? How does the master budget serve as a coordination tool? How is the budgeted balance sheet prepared? How do changes in one budget cascade through the master budget?
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Budgeting & Forecasting › The Master Budget

How is depreciation handled across the master budget statements?

Intermediate

Answer

Depreciation is an expense in the budgeted income statement (reducing profit) and reduces the carrying value of non-current assets (accumulated depreciation) on the budgeted balance sheet, but it is a non-cash item, so it's excluded from the cash budget. Its consistent treatment across statements is needed for them to articulate.
Real-world example Budgeted depreciation lowers profit and asset values but never appears in the cash budget.

Common follow-ups: Why is depreciation excluded from cash? | Where does it reduce the balance sheet?

Cash Budgeting Capital Budgeting The Master Budget
All 34 The Master Budget questions