Spreadsheet software can aid in the preparation and analysis of budgets because of which relationship between static and flexible budgets?
Multiple Choice
A. Flexible budgets can be used to derive budgeted financial statements.
B. Static budget can be used as the basis of the master budget.
C. Static budget provides responses to the question "What if" the planned budget had included a certain volume.
D. Flexible budget provides responses to the question "What if" the planned budget had included a certain volume.
The answer is D) Flexible budget provides responses to the question "What if" the planned budget had included a certain volume.
Explanation- A flexible budget is one which adjusts itself with the changes in assumptions that are made during the planning process. This flexibility in budget allows organization to estimate what the budgeted figures would look like at different levels of sales made. On the other hand, In static budget the company cannot twist the budget to manage the changes required.
So ,where the planned budget includes volume or changes in its level, then the same shall be duly taken care of and adjusted with help of flexible budgets and hence, providing solution to the above question.
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