In a flexible budget, the budgeted cost for a given level of activity is based on: MCQ with Answer and Explanation

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

A. Fixed budget only

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

C. Zero base

D. Previous year actuals only

Answer: Option B

Solution (By JKSSB Mock Tests)

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

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

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Question #1

A sales book is meant to record:

A. All sales of goods

B. Sales of assets

C. Cash sales of goods

D. Credit sales of goods

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Correct Answer: Option D

Explanation:
Sales book records only credit sales of goods in which the trader deals.

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

Question #2

A: Marginal cost is the cost of producing one additional unit. R: Marginal cost includes both fixed and variable costs. Choose the correct option.

A. Both A and R are true but R is NOT the correct explanation of A

B. A is false but R is true

C. A is true but R is false

D. Both A and R are true and R is the correct explanation of A

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Correct Answer: Option C

Explanation:
Marginal cost is indeed the cost of producing one additional unit. However, it only includes variable costs, as fixed costs do not change with the level of production in the short term. A is true, R is false.

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

Question #3

Under the Income Tax Act, if a taxpayer has a business profit of ₹3,00,000 and a brought forward business loss of ₹2,00,000, what is the total income after set-off?

A. ₹5,00,000

B. ₹2,00,000

C. ₹1,00,000

D. ₹3,00,000

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Correct Answer: Option C

Explanation:
Brought forward business loss can be set off against current year business profit. Total income = ₹3,00,000 (Profit) - ₹2,00,000 (B/F Loss) = ₹1,00,000.

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

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