The term 'Zero-Based Budgeting' (ZBB) requires: MCQ with Answer and Explanation

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The term 'Zero-Based Budgeting' (ZBB) requires:

A. Ignoring all costs

B. Using the previous year's budget as a base

C. Preparing the budget from scratch every year

D. Setting the budget to zero

Answer: Option C

Solution (By JKSSB Mock Tests)

Zero-Based Budgeting requires every expense to be justified for each new period, starting from a 'zero base' rather than using previous budgets.

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Question #1

A company's current ratio is 2:1. If current liabilities are ₹1,00,000, current assets are:

A. ₹2,00,000

B. ₹50,000

C. ₹3,00,000

D. ₹1,00,000

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Correct Answer: Option A

Explanation:
Current ratio = Current assets / Current liabilities; 2 = CA / 1,00,000 => CA = ₹2,00,000.

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

Question #2

A favourable variance in materials cost indicates that:

A. Sales volume increased

B. More material was used than budgeted

C. Actual cost of materials was less than the standard cost

D. Material price increased in the market

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Correct Answer: Option C

Explanation:
Favourable means beneficial to profit, which happens when actual costs are lower than standard expected costs.

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Question #3

Under GST, the 'Composition Levy' scheme has a threshold limit of ₹1.5 Crore (₹75 Lakhs for NE states). What is the tax rate payable by a composition dealer for manufacturers/traders?

A. 1% (0.5% CGST + 0.5% SGST)

B. 5% (2.5% CGST + 2.5% SGST)

C. 6% (3% CGST + 3% SGST)

D. 2% (1% CGST + 1% SGST)

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Correct Answer: Option A

Explanation:
Under the GST Composition Scheme, manufacturers and traders are required to pay tax at a concessional rate of 1% (0.5% CGST + 0.5% SGST) of their turnover in India.

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