Question

Question 1

The difference between a static budget and a flexible budget is as follows:

a	The flexible budget highlights a single activity, while a static budget allows budgeting over a range of activities.

b	The static budget highlights a single activity level, while the flexible budget shows expected results for several activity levels.

c	The flexible budget measures expected income throughout a relevant range, while the static budget measures various activity levels for only one relevant range.

d	There is no difference between a static budget and a flexible budget except for the names.

Question 2

Continuous budgeting

a	measures the ten-year period from the beginning of the next fiscal year.

b	means that a new 12-month budget must be made after the current 12-month budget expires.

c	is the responsibility of the external auditor for the corporation.

d	None of the above answers is correct.

Question 3

The master budget for a corporation begins with

a	the sales budget.

b	the production budget.

c	the cash budget.

d	the cost of good sold budget.

Question 4

The production budget is done

a	in dollars only.

b	in units only.

c	in both dollars and units.

d	in neither dollars nor units.

Question 5

The cash budget

a	includes expected receipts and payments of cash for a period of time.

b	does not include any planned purchases of fixed assets.

c	is a stand-alone budget -- that is, it is not integrated with any of the other operating budgets.

d	must always show more money coming in than money going out..

Answer 1

Ans.1	A)     The flexible budget highlights a single activity, while a static budget allows budgeting over a range of activities.
	*This is the primary difference between Flexible budget and Static budget that
	"The static budget is adjusted for different activity levels, whereas the flexible budget is prepared for a single activity level."
Ans.2	B)   Means that a new 12-month budget must be made after the current 12-month budget expires.
	*In the process of continuous budgeting one month added to the end of a period as each month goes by.
Ans.3	A) The sales budget.
	*The master budget for a corporation begins with a forecast of sales or a sales budget.
Ans.4	B) In units only.
	*The production budget is done in units only. In this budget all calculations are made in units only.
	And it provides the (answer) No. of units produced.
Ans.5	A)    Includes expected receipt and payments of cash for a period of time.
	*Only cash expenses or revenues are included in cash budget.
	The purchase of fixed assets in cash are also included in the cash budget.