A 'Flexible Budget' is most useful because it: MCQ with Answer and Explanation

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A 'Flexible Budget' is most useful because it:

A. Shows expected costs at various levels of actual production

B. Only targets cash flows

C. Assumes all costs are fixed

D. Can be changed by managers without approval

Answer: Option A

Solution (By JKSSB Mock Tests)

Unlike a static budget, a flexible budget adjusts based on the actual activity level, providing a realistic benchmark for variance analysis.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The 'GST on Affordable Housing' under the new regime is:

A. Exempt

B. 1% without ITC

C. 5%

D. 12%

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Correct Answer: Option B

Explanation:
GST for affordable housing is 1% without input tax credit.

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Question #2

In a flexible budget, the budgeted cost for a given level of activity is based on:

A. Zero base

B. Fixed budget only

C. Recognition of cost behaviour patterns (fixed and variable)

D. Previous year actuals only

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Correct Answer: Option C

Explanation:
Flexible budget adjusts for different activity levels by separating fixed and variable costs.

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Question #3

The 'Cash Budget' primarily helps in:

A. Determining cash requirements

B. Profit planning

C. Sales planning

D. Capital expenditure decisions

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Correct Answer: Option A

Explanation:
Cash budget forecasts cash receipts and payments to ascertain cash surplus or deficit.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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