• Budget is a quantitative expression of the managements’ plans for a specific period of time, either in physical or financial terms or both.
• Capital budgeting is the process of evaluating the feasibility of a project, using some indicators such as rate of return, the time needed to pay back, etc.
• A master budget is the combination of operational and financial budgets covering all aspects of company’s operations for a period of time.
• The master budget is made of two separate series of schedules and budgets; operating budgets and financial budgets.

As also understood from the information the statements in the options I and IV are correct, so the correct answer is C. The statements in the option II is not correct because of the fact that capital budgeting is the process of evaluating the feasibility of a project, using some indicators such as rate of return, the time needed to pay back, etc. The statement in the option II is not correct, either because of the fact that a master budget is the combination of operational and financial budgets covering all aspects of company’s operations for a period of time.