A: Zero-Based Budgeting requires justification for all expenses. R: It starts with a zero base for every new period. Choose the correct option. MCQ with Answer and Explanation
A: Zero-Based Budgeting requires justification for all expenses. R: It starts with a zero base for every new period. Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. A is true but R is false
C. Both A and R are true but R is NOT the correct explanation of A
D. A is false but R is true
Answer: Option A
Solution (By JKSSB Mock Tests)
ZBB requires managers to justify every item of expenditure from scratch. This is because it starts with a 'zero base' for each new period, rather than using the previous year's budget as a baseline. R correctly explains A.
A: A current ratio of 2:1 is generally considered ideal. R: It indicates that current assets are twice the current liabilities, ensuring good short-term liquidity. Choose the correct option.
A.Both A and R are true and R is the correct explanation of A
B.A is true but R is false
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
A current ratio of 2:1 is a standard benchmark for short-term solvency. It means the firm has double the current assets to cover its current liabilities, providing a safety margin. R correctly explains A.
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