Costing - Study Mode
[#1151] A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:
Correct Answer
(D) Flexible budget
Explanation
Solution: A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as Flexible budget. A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change.
[#1152] _________ is also known as working capital ratio.
Correct Answer
(A) Current ratio
Explanation
Solution: Current ratio is also known as working capital ratio. The working capital ratio is commonly used to assess a company's financial performance. Low working capital ratio values, near one or lower, can indicate serious financial problems with a company. The working capital ratio reveals whether the company has enough short-term assets to pay off its short-term debt.
[#1153] ___________ is a summary of all functional budgets in a capsule form.
Correct Answer
(B) Master Budget
Explanation
Solution: Master Budget is a summary of all functional budgets in a capsule form. Master Budget, in a broader sense, is a summary budget incorporating all financial budgets in a capsule form.
[#1154] _____________ is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items.
Correct Answer
(A) Cash Budget
Explanation
Solution: Cash Budget is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items. A cash budget is an estimation of the cash inflows and outflows for a business over a specific period of time. This budget is used to assess whether the entity has sufficient cash to operate.
[#1155] Statutory cost audit are applicable only to:
Correct Answer
(B) Company
Explanation
Solution: Statutory cost audit are applicable only to Company. A statutory audit is a legally required review of the accuracy of a company's or government's financial statements and records.