A: Flexible budget is prepared for a range of activity levels. R: It helps in performance evaluation at different actual activity levels. Choose the correct option. MCQ with Answer and Explanation
A: Flexible budget is prepared for a range of activity levels. R: It helps in performance evaluation at different actual activity levels. Choose the correct option.
A. A is false but R is true
B. Both A and R are true and R is the correct explanation of A
C. A is true but R is false
D. Both A and R are true but R is NOT the correct explanation of A
Answer: Option B
Solution (By JKSSB Mock Tests)
A flexible budget is designed to change with the level of activity, providing budgeted costs for various levels. This allows management to compare actual performance with the budgeted costs for the *actual* level of activity, aiding in fair performance evaluation. R correctly explains A.
A: A Ledger account is opened for each type of asset, liability, equity, income, and expense. R: The Ledger is the principal book of accounts. Choose the correct option.
A.A is true but R is false
B.A is false but R is true
C.Both A and R are true but R is NOT the correct explanation of A
D.Both A and R are true and R is the correct explanation of A
Explanation:
A ledger account is indeed opened for every element of the financial statements to classify and summarize transactions. It is the principal book of accounts. Both are true, but R doesn't explain *why* accounts are opened for each element.
Explanation:
Sunk costs are past expenditures. Since they cannot be changed by present or future decisions, they are considered irrelevant for decision making.
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