S1: Zero-Based Budgeting (ZBB) starts with a zero base for every new period. S2: Flexible Budget is prepared for a single level of activity. Which statement(s) is/are correct? MCQ with Answer and Explanation

S1: Zero-Based Budgeting (ZBB) starts with a zero base for every new period. S2: Flexible Budget is prepared for a single level of activity. Which statement(s) is/are correct?
A. Both S1 and S2
B. Neither S1 nor S2
C. S1 only
D. S2 only
Answer: Option C
Solution (By JKSSB Mock Tests)
ZBB requires justifying all expenses from scratch (zero base) for each period. A Flexible Budget is designed to change with different levels of activity, not a single level (which is a Fixed Budget). S1 is correct, S2 is incorrect.

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Practice More Accountancy and Book Keeping Questions

Question #1
A reserve created out of normal operating profits is called a:
A. Revenue Reserve
B. Secret Reserve
C. Capital Reserve
D. Specific Reserve

Correct Answer: Option A


Explanation:
Revenue reserves are built from day-to-day operational net profits and can be utilized for distributing dividends.

Question #2
A company issued 10,000 shares of ₹10 each at par, payable ₹2 on application, ₹3 on allotment, ₹5 on call. A shareholder holding 500 shares failed to pay call money. Calls-in-arrears amount is:
A. ₹1,000
B. ₹1,500
C. ₹2,500
D. ₹5,000

Correct Answer: Option C


Explanation:
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Question #3
The primary objective of management accounting is to:
A. Ensure compliance with accounting standards
B. Calculate tax liability
C. Assist management in planning and decision-making
D. Provide information to external stakeholders

Correct Answer: Option C


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Management accounting focuses on providing internal management with the financial and non-financial information needed for planning, controlling, and decision-making.