In management accounting, which statement best describes a budget?

Introduction / Context:
This question tests a fundamental definition in management accounting and financial planning: the meaning of a budget. Budgets are central tools for planning, controlling, and evaluating organisational performance. They translate strategic and operational plans into quantitative, usually monetary, terms so that managers can allocate resources, set targets, and measure results.

Given Data / Assumptions:
- The focus is on the general definition of a budget, not on specific types such as cash or capital budgets.
- The organisation is a company, but the definition also applies to other entities such as governments and non profits.
- A correct definition should mention future plans and their expression in monetary terms in a structured and formal way.

Concept / Approach:
A budget is more than an informal idea about the future. It is a formal statement that summarises planned activities, revenues, expenses, and resource usage for a defined period. It is usually expressed in monetary terms to allow comparison, aggregation, and control. Budgets serve as tools for planning and also as yardsticks for performance evaluation when actual results are later compared with budgeted figures.

Step-by-Step Solution:
Step 1: Examine each option to see whether it mentions both future plans and monetary expression. Step 2: Check whether the description suggests a formal, structured document rather than a casual or informal idea. Step 3: Option C states that a budget is a formal statement of company future plans, usually expressed in monetary terms. Step 4: Confirm that this aligns with textbook and professional definitions and that other options are incomplete or inaccurate.

Verification / Alternative check:
Standard management accounting texts define a budget as a financial or quantitative statement, prepared and approved before a defined period of time, specifying planned expenditures and resources. This description matches option C closely, reinforcing it as the correct answer. Professional practice in companies also treats budgets as formal documents approved by management, not informal suggestions.

Why Other Options Are Wrong:
Option A calls a budget a master control device but ignores its planning and monetary aspects and overemphasises control. Option B hints at evaluation but again does not mention specification of future plans in monetary terms and is therefore incomplete. Option D describes an informal statement, which contradicts the formal, approved nature of real budgets that organisations rely on for decision making.

Common Pitfalls:
Learners sometimes underestimate the planning role of budgets and focus only on control or cost cutting. Others confuse a budget with casual forecasts or wish lists that are not formally approved. Remember that in exams, the correct definition must highlight three elements: formality, future orientation, and expression in monetary terms, all of which point to option C.

Final Answer:
The correct choice is A formal statement of a company future plans, usually expressed in monetary terms..